LNG Remains Hot Commodity Despite Emerging Concerns

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Written by Daniel Graeber for Industrial Info Resources (Sugar Land, Texas)--While major energy companies continue to highlight the importance of liquefied natural gas (LNG) in their portfolios, upstream-focused Baker Hughes and a handful of U.S. lawmakers are fretting over the future.

Supported largely by the vast inland shale natural gas deposits, the United States is the clear leader in exports of LNG. Federal data show 21 vessels laden with LNG departed U.S. export terminals over the seven-day period ending March 20 carrying a combined 78 billion cubic feet (Bcf) of product.

The federal government estimates total LNG exports will average 12 billion cubic feet per day (Bcf/d) in 2024 and expand by another 2 Bcf/d next year. That expansion comes even as U.S. President Joe Biden put a pause on new terminals to review the environmental footprint of LNG.

A recent report from energy consultant group Wood Mackenzie finds the U.S. LNG sector is highly polluting, particularly in methane. Methane is a potent greenhouse gas with far more warming potential than carbon dioxide (CO2).

"With a range of 800 to 1,400 kilograms CO2 equivalent per tonne of LNG, the U.S. has some of the world's highest-emitting projects, with upstream reservoir type and pipeline distance to LNG plants adding to their high methane intensity," said Massimo Di Odoardo, a vice president of gas and LNG research at Wood Mackenzie.

Analysts attribute the emissions to the use of pneumatic devices and compressors deployed during production in the shale patch.

Even with the environmental concern, LNG has become highly important due to geopolitical issues. The U.S., for example, has eaten away at Russia's market share for natural gas in the European market due to sanctions imposed in response to the war in Ukraine.

That, in turn, has made it something of a political issue at home. This week, Texas Attorney General Ken Paxton was joined by 15 other states in filing a suit against the pause on new LNG permits, arguing it could result in billions of dollars in losses.

Meanwhile, the head of Baker Hughes said the U.S. could lose market share to rivals such as Qatar and Argentina, the latter of which rivals the Permian Basin with its Vaca Muerta shale natural gas deposit.

But so far, Exxon Mobil Corporation (NYSE:XOM) (Irving, Texas) has not seen a downturn in U.S. orders related to the LNG sector, according to the Reuters news service. Globally, ExxonMobil says the future is bright for its LNG portfolio. The head of the company's LNG segment said plans to double its portfolio to 40 million tons per annum by 2030 are ahead of schedule.

ExxonMobil is unlikely to garner the LNG footprint of the likes of Shell, but Peter Clarke, ExxonMobil's senior vice president for global LNG, told Reuters there may be more value in sales.

"The big component in LNG is obviously the commercialization of the LNG itself," he said. "We want to have the leading LNG portfolio in the world in terms of its financial robustness and financial returns. I would say we're well on the way to doing it."

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