More Natural Gas Coming to Market for Energy Security

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Written by Daniel Graeber for Industrial Info Resources (Sugar Land, Texas)--New offtake agreements from liquefied natural gas (LNG) export terminals in the southern United States are a boon for global energy security, the head of Venture Global LNG (Arlington, Virginia) said Wednesday.

Venture Global announced that it secured two long-term sales and purchase agreements with New Fortress Energy Incorporated (NASDAQ:NFE) (New York, New York) to secure LNG over a 20-year period. The company said that 1 million tons of LNG per year would come from the planned Plaquemines LNG facility and another 1 million tons per year would come from the second phase of the Calcasieu Pass terminal, both in Louisiana. Industrial Info is tracking 25 Venture Global Projects, worth more than $34 billion. Subscribers to Industrial Info's Global Market Intelligence (GMI) Oil & Gas Production Project Database can click here for a list of detailed project reports.

This is the first long-term purchase agreement for Phase Two at Calcasieu Pass.

"Venture Global is proud to enter into a long-term LNG partnership with New Fortress Energy," said Chief Executive Officer Mike Sabel. "Our companies share a commitment to keeping energy markets well supplied while also advancing clean energy goals, through the export of low-cost U.S. LNG to emerging economies."

Sabel added that these deals help establish southern Louisiana as an international hub for global energy security.

Click on the image at right for a chart showing gas flows to U.S. LNG liquefaction facilities from October 31, 2020 to March 16, 2022.

The U.S. has emerged as an important crude oil exporter since lifting a 40-year-old ban on foreign deliveries in 2015. The U.S. also is a global leader in natural gas. The U.S. Department of Energy estimates total U.S. gas production will average 96.7 billion cubic feet per day (Bcf/d) this year, some 3% higher than in 2021. By 2023, that volume will soar to 99.1 Bcf/d.

In terms of LNG, the U.S. is on pace to become the global leader in exports, leapfrogging Australia and Qatar at some point this year. That potential only adds to the ambitions for energy security spelled out by Venture Global.

"Many U.S. LNG cargoes were delivered to Europe last month, where inventories are lower than the five-year average and potential supply disruptions related to the conflict in Ukraine are a concern," the U.S. Energy Information Administration (EIA) said in a recent market report.

Click on the image at right for a map showing the destination of U.S LNG exports last year.

Elsewhere, and in more immediate terms, European suppliers are stepping up to ensure the continent has adequate supplies in the face of Western sanctions on Russian energy. Norwegian energy major Equinor, an important exporter in its own right, said new federal permits mean it can export more natural gas through at least September from its Osberg and Heidrun fields to address supply-side issues in the European market.

"Our focus is to maintain safe and efficient operations on our facilities, remaining a reliable supplier of energy to the markets in Europe in a highly challenging situation," said Kjetil Hove, an executive vice president for upstream Norway at Equinor. "In close dialogue with the authorities and our partners we are now taking steps to maintain the high production level from the winter."

While there are no sanctions targeting the flow of Russia crude oil or natural gas directly, suppliers from all sides of the energy sector are wary of getting caught with untradeable goods.

Russia and Norway are the primary suppliers of piped natural gas to the European continent. The U.S., Qatar and Russia were the top shippers of LNG to the continent last year.

Click on the image at right for a chart showing U.S. LNG exports to Europe by country in March, and European LNG imports by country, as provided by Refintiv.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: LinkedIn.