Expect More LNG from U.S. Producers

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Researched by Daniel Graeber for Industrial Info Resources (Sugar Land, Texas)--The expected relaunch of the Freeport LNG facility in Texas should help catapult exports of the super-cooled gas to record levels, the U.S. Energy Department forecasts.

"We forecast U.S. natural gas exports to increase in 2023, driven largely by growth in LNG (liquefied natural gas) exports," the U.S. Energy Information Administration (EIA), the statistical arm of the Department of Energy, stated its monthly report for November.

The year got off on the right foot for U.S. LNG capacity with the launch of the Calcasieu Pass terminal in Louisiana. Calcasieu Pass, the seventh U.S. LNG export facility since 2016, is a multi-train facility with a liquefaction capacity of 1.3 billion cubic feet per day (Bcf/d).

U.S. LNG capacity was curtailed, however, when a June fire idled activity at the three-train Freeport LNG facility. Its 2 Bcf/d represented about 17% of total U.S. LNG capacity at the time. The operators at Freeport pushed back an expected relaunch date from mid-December to the end of the year.

Once it starts up again, U.S. LNG exports will approach record-setting levels.

"When Freeport LNG resumes, we forecast U.S. LNG exports will establish a new record close to 12.5 Bcf/d in March 2023," EIA's report read. "We expect LNG exports will then reach 12.7 Bcf/d by the end of 2023."

A forecast from consultant group Rystad Energy (Oslo, Norway) puts U.S. natural gas production at just more than 100 Bcf/d for December, with much of the supply growth coming from the Haynesville and Permian shale basins. That production only will help to secure more volumes of super-cooled gas for foreign markets.

Regasification capacity in the European Union and U.K., meanwhile, has been more or less steady over the last 10 years, increasing from 17.5 Bcf/d to 20.2 Bcf/d at the end of 2021. The EIA, however, found that changed with the start of Russia's invasion of Ukraine in February, prompting a scramble for replacements from Russian natural gas.

The EIA now expects European and U.K. capacity to expand by roughly 5.3 Bcf/d by the end of 2023 and by another 1.5 Bcf/d by the end of 2024. Germany leads the way with three floating storage and regasification units (FSRU), with a combined regasification capacity of 1.4 Bcf/d under development.

Rystad Energy estimates that cold weather in Europe is leading to an increase in demand for natural gas, though the demand surge is supported in part by record high levels of LNG exports. Apart from the U.S., the region is getting shipments of natural gas from Norway and from new supplies from African producers.

France, Spain and the U.K. account for about half of all LNG imports, which hit a record high of 11.4 million tonnes in November, Rystad found.

Assuming U.S. feedstock remains supportive, LNG exports only will increase from here on out. Sempra Energy (NYSE:SRE) (San Diego, California) recently signed a 15-year sale and purchase agreement with energy company Engie S.A. (Paris, France) for eventual molecules from the planned Port Arthur LNG plant in Texas.

The first phase of the facility could be in service by the first quarter of next year.

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