For Better or Worse, U.S. LNG Deals Keep Coming

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Written by Daniel Graeber for Industrial Info Resources (Sugar Land, Texas)--While the World Bank frets over the price premium coming from U.S. LNG exports, more work is slated for expansion projects as Japan signs on to long-term supplies.

The World Bank in a biannual report on energy markets said it expects a notable increase in the price of natural gas this year, due largely to price increases in the U.S. market. A mild-weather approach to summer and adequate storage is keeping markets in check globally, though exports of liquefied natural gas (LNG) from the United States offset that as they draw on domestic supplies and put a premium behind the U.S. benchmark, Henry Hub.

Henry Hub on Friday was trading at around $3.50 per million British thermal units (mmBtu), compared with $2.43 per MMBtu at this time last year. The U.S. Energy Department put the 2024 average for Henry Hub at $2.20 per MMBtu and expects the average to be closer to $4.90 by next year.

Former President Joe Biden enacted a pause on new LNG projects during a tenure that ended in January, arguing the potential release of methane up and down the supply chain merited examination. Natural gas is made primarily of methane, which is a remarkable energy carrier but also a potent greenhouse gas with far more warming potential than carbon dioxide.

U.S. President Donald Trump on his return to the White House reversed course by incentivizing much of the fossil fuels sector through an emergency declaration in one of his first acts of office, backing a handful of new and previously-shelved LNG projects since.

U.S. LNG exports averaged 12 billion cubic feet per day (Bcf/d) last year and are expected to increase by more than 30% next year to 16 Bcf/d. Recent data from IIR Energy, however, finds volumes are somewhat suppressed due to regular maintenance on the nation's pipeline network.

IIR Energy found production in general was suppressed by maintenance, with output about 1.2 Bcf/d below levels from early last week. As such, the amount of natural gas running to the eight operational LNG export terminals was down about 1.3 Bcf/d from last year, according to Maria Sanchez, a natural gas products and senior energy analyst at IIR Energy.

"The decline is primarily driven by reduced flows to Sabine Pass, where maintenance at the Gillis Compressor Station is expected to continue through June 22," she wrote in a Thursday report.

Venture Global LNG (Arlington, Virginia), among the premier LNG exports in the United States, said earlier this week in a letter to federal regulators that it was pausing plans to pursue its Delta LNG project, saying it would be the "best use" of its resources to focus on expanding its Plaquemines export facility in Louisiana. Plaquemines, which received its first batch of feedgas in December, helped lift total U.S. LNG volumes this year.

More feedgas may be necessary, however, given the bevy of new work that emerged since Trump's return to the White House. Joined by U.S. Interior Secretary Doug Burgum and Energy Secretary Chris Wright, Japanese power company JERA (Tokyo) signed six 20-year sales and purchase agreements with U.S. LNG exporters last week.

Supplies would come from the proposed Commonwealth LNG facility in Louisiana, led by Kimmeridge (New York, New York), and the fifth train of NextDecade Corporation's (Houston, Texas) Rio Grande facility in Texas, which has yet to reach a final investment decision (FID). Subscribers to Industrial Info's Global Market Intelligence (GMI) Project Database can learn more by viewing the related project reports.

"These agreements strengthen Japan's energy security, reaffirm the U.S.'s leading role in the global LNG market, and support long-term sustainable economic development for both countries," Yukio Khani, the chairman of JERA, said Thursday.

The same day, however, NextDecade said it would fork over $4.8 billion to engineering firm Bechtel (Reston, Virginia) to start engineering, procurement and construction work at Train 5, which moves the facility one step closer to FID.

Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).