IEA: U.S. LNG Exports Go into High Gear

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Researched by Industrial Info Resources (Sugar Land, Texas)--The International Energy Agency (IEA) (Paris, France) estimates that by 2022, the U.S. will be on course to challenge Australia and Qatar for global leadership among liquefied natural gas (LNG) exporters. The U.S. will account for 40% of the world's extra gas production in 2022, thanks to the "remarkable growth in its domestic shale industry," the IEA said in a Thursday press statement. Industrial Info is tracking nearly $26 billion in active U.S. LNG terminal-related projects.

Already the world's largest gas consumer and producer, the U.S. will produce 890 billion cubic meters by 2022, or more than a fifth of global gas output, the IEA said. Production from the Marcellus shale, one of the world's largest fields, will increase by 45% between 2016 and 2022, "even at current low price levels, as producers increase efficiency and produce more gas with fewer rigs," the agency said.

More than half of the increase in U.S. production will be used for liquefied natural gas for export, the IEA said. For related information, see July 11, 2017, article - LNG: Fuel of the Free.

"The U.S. shale revolution shows no sign of running out of steam and its effects are now amplified by a second revolution of rising LNG supplies," said IEA Executive Director Fatih Birol in a press statement. "Also, the rising number of LNG consuming countries, from 15 in 2005 to 39 this year, shows that LNG attracts many new customers, especially in the emerging world. However, whether these countries remain long-term consumers or opportunistic buyers will depend on price competition."

Global gas demand is expected to grow by 1.6% a year for the next five years, with consumption reaching almost 4,000 billion cubic meters by 2022, up from 3,630 billion cubic meters in 2016. China will account for 40% of the growth. Industrial consumption of natural gas will emerge as the main engine of demand growth, according to the IEA, accounting for half of the forecast growth. Demand in the main gas-consuming sector -- power generation -- will continue to expand, but at a rate of less than 1% per year.

"In many mature markets, the rapid increase in power generation from renewables, combined with modest growth in electricity demand, limits opportunities for thermal generation," according to the IEA report summary. "In many emerging markets that rely on imported gas, especially those without a price on carbon or strict regulations on air pollution, gas faces very strong competition from coal."

The U.S. Department of Energy's Energy Information Administration (EIA) is projecting that the U.S. will become a net exporter of natural gas on average in 2017, with net exports expected to average 0.4 billion cubic feet per day (Bcf/d). Net exports are forecast to be 1.3 Bcf/d in 2018.

U.S. LNG gross exports will average 1.9 Bcf/d in 2017, according to the U.S. EIA, up from 0.5 Bcf/d in 2016, as Cheniere Energy Incorporated's (NYSE:LNG) (Houston, Texas) LNG trains 1 through 4 at its Sabine Pass facility in Louisiana are expected to be fully operational, and Dominion Resources Incorporated's (NYSE:D) (Richmond, Virginia) Cove Point LNG facility in Maryland is expected to come online. For more information on Cove Point, see Industrial Info's project report.

The U.S. EIA is projecting gross LNG exports to average 2.8 Bcf/d in 2018, as Sabine Pass and Cove Point ramp up capacity, and two new LNG facilities come online. The new facilities include trains 1 and 2 of Sempra Energy's (NYSE: SRE) (San Diego, California) Cameron LNG liquefaction plant in Hackberry, Louisiana, and Freeport LNG Development LP's (Houston, Texas) Train 1 in Freeport, Texas. For more information on Sempra's Cameron project, see Industrial Info's project report; also see Industrial Info's project report on Freeport LNG's Train 1.

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