Reports related to this article:
Project(s): View 1 related project in PECWeb
Plant(s): View 2 related plants in PECWeb
Released September 18, 2023 | SUGAR LAND
en
Written by Paul Wiseman for Industrial Info Resources (Sugar Land, Texas)--After the U.S. led world liquefied natural gas (LNG) exports in first-half 2022, at 11.2 billion cubic feet per day (Bcf/d), a June 8, 2022, fire and resulting long-term shutdown at the Freeport LNG plant in Texas caused the nation to drop from the top spot for the rest of the year. The U.S. Energy Information Administration (EIA) reported that 2 Bcf/d, or 17% of total U.S. LNG export capacity, were lost in the aftermath.
But the plant's January 2023 restart pushed the U.S. back to the top for H1 2023, the EIA reported last week, ahead of Australia (10.6 Bcf/d) and Qatar (10.4 Bcf/d). The U.S. average of 11.6 Bcf/d surpassed its first-half 2022 numbers by 0.4 Bcf/d.
U.S. 2023 averages were boosted by a record 12.4 Bcf/d in April, as "Freeport LNG ramped up LNG production and as Europe and the U.K. continued to increase LNG imports to compensate for reduced pipeline imports from Russia and to refill storage inventories," the EIA stated. For related information, see March 1, 2023, article - Freeport Nearly Ready to Lift U.S. LNG Export Capacity.
Europe and the U.K. received 67% of U.S. exports in 2023, down slightly from their 71% share in first-half 2022, said the EIA.
Europe is continuing to compensate for pipeline import losses from Russia and is refilling storage inventories. The U.K., Finland, Germany, Italy and Spain have all added regasification capacities over the last 12 months.
Also, first-half 2023 marked the first time that EU/U.K. LNG imports exceeded pipeline-borne imports, as the EIA quoted data from Refinitiv Eikon. "Europe and the U.K.'s LNG imports averaged 15.9 Bcf/d, 0.1 Bcf/d more than that region's imports by pipeline from all sources. In 2022, LNG imports to the region averaged 14.9 Bcf/d annually, 28% (5.8 Bcf/d) less than natural gas imports by pipeline. Europe and the U.K.'s LNG imports peaked in April 2023 at 18.0 Bcf/d and remained above natural gas imports by pipeline from April through June 2023," the EIA reported.
Keeping Up with the Joneses for LNG
Although U.S. LNG exports grew slightly year-over-year, keeping up with growth opportunities in Europe may be a challenge. Back in April, the EIA's Annual Energy Outlook 2023 (AEO) Reference Case scenario predicted growth in both areas. For the era between 2022 and 2050, the EIA projected 15% natural gas production growth and 152% LNG export growth (to 10 Tcf). That production growth would largely come from the Gulf Coast, the Permian Basin and the Haynesville formation, largely because they are "close to infrastructure connecting natural gas supply to growing LNG export facilities."
International research firm Rystad predicts a global supply gap of 71 million tonnes (equal to 3.46 Bcf) of LNG by 2030. Rystad sees the U.S. as greatly responsible for bridging that gap, seeing average annualized export growth of 11.7% through 2030. The research firm lists 25 LNG projects that have been greenlighted or are currently under review by the U.S. Department of Energy (DOE) to receive a license to "export LNG to non-free trade agreement countries."
But, says Rystad, a recent DOE rule change limiting the amount of time LNG developers with an export license have to reach a final investment decision (FID) could halt at least some future projects. The report states, "Developers' licenses are usually up for review twice a year, and renewals were almost guaranteed regardless of the project status; however, those days might be over."
The DOE's April 2023 denial of a second extension to Energy Transfer's (NYSE:ET) (Dallas, Texas) Lake Charles LNG project "has sparked increased interest centering around North America's next wave of LNG." The report notes that Mexico has revealed ambitions of becoming a significant LNG exporter, and delays in expanding U.S. LNG capacity could give its southern neighbor an open door. Ironically, Mexico could use natural gas from Texas' Permian Basin to supply its LNG plants in such a scenario. Three pipelines currently carry Permian gas across the border, with another in the early permitting stages.
What about the price?
Whatever the demand, natural gas producers must make money. Starting late in 2022, prices for that commodity fell into the $2-per-million British thermal unit (MMBtu) range, and have stayed under $3 since then. Rystad reports that shale gas from Haynesville and others can cover the domestic market at those prices. Exports, however, due to the cost of liquefaction and transportation, require $3-$4 per MMbtu.
In oil-rich basins such as the Permian, Niobrara and Eagle Ford, natural gas is considered to be basically free, because it is a byproduct of producing the oil that drives profitability. Natural gas from these regions is a strong component of LNG exports.
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).
But the plant's January 2023 restart pushed the U.S. back to the top for H1 2023, the EIA reported last week, ahead of Australia (10.6 Bcf/d) and Qatar (10.4 Bcf/d). The U.S. average of 11.6 Bcf/d surpassed its first-half 2022 numbers by 0.4 Bcf/d.
U.S. 2023 averages were boosted by a record 12.4 Bcf/d in April, as "Freeport LNG ramped up LNG production and as Europe and the U.K. continued to increase LNG imports to compensate for reduced pipeline imports from Russia and to refill storage inventories," the EIA stated. For related information, see March 1, 2023, article - Freeport Nearly Ready to Lift U.S. LNG Export Capacity.
Europe and the U.K. received 67% of U.S. exports in 2023, down slightly from their 71% share in first-half 2022, said the EIA.
Europe is continuing to compensate for pipeline import losses from Russia and is refilling storage inventories. The U.K., Finland, Germany, Italy and Spain have all added regasification capacities over the last 12 months.
Also, first-half 2023 marked the first time that EU/U.K. LNG imports exceeded pipeline-borne imports, as the EIA quoted data from Refinitiv Eikon. "Europe and the U.K.'s LNG imports averaged 15.9 Bcf/d, 0.1 Bcf/d more than that region's imports by pipeline from all sources. In 2022, LNG imports to the region averaged 14.9 Bcf/d annually, 28% (5.8 Bcf/d) less than natural gas imports by pipeline. Europe and the U.K.'s LNG imports peaked in April 2023 at 18.0 Bcf/d and remained above natural gas imports by pipeline from April through June 2023," the EIA reported.
Keeping Up with the Joneses for LNG
Although U.S. LNG exports grew slightly year-over-year, keeping up with growth opportunities in Europe may be a challenge. Back in April, the EIA's Annual Energy Outlook 2023 (AEO) Reference Case scenario predicted growth in both areas. For the era between 2022 and 2050, the EIA projected 15% natural gas production growth and 152% LNG export growth (to 10 Tcf). That production growth would largely come from the Gulf Coast, the Permian Basin and the Haynesville formation, largely because they are "close to infrastructure connecting natural gas supply to growing LNG export facilities."
International research firm Rystad predicts a global supply gap of 71 million tonnes (equal to 3.46 Bcf) of LNG by 2030. Rystad sees the U.S. as greatly responsible for bridging that gap, seeing average annualized export growth of 11.7% through 2030. The research firm lists 25 LNG projects that have been greenlighted or are currently under review by the U.S. Department of Energy (DOE) to receive a license to "export LNG to non-free trade agreement countries."
But, says Rystad, a recent DOE rule change limiting the amount of time LNG developers with an export license have to reach a final investment decision (FID) could halt at least some future projects. The report states, "Developers' licenses are usually up for review twice a year, and renewals were almost guaranteed regardless of the project status; however, those days might be over."
The DOE's April 2023 denial of a second extension to Energy Transfer's (NYSE:ET) (Dallas, Texas) Lake Charles LNG project "has sparked increased interest centering around North America's next wave of LNG." The report notes that Mexico has revealed ambitions of becoming a significant LNG exporter, and delays in expanding U.S. LNG capacity could give its southern neighbor an open door. Ironically, Mexico could use natural gas from Texas' Permian Basin to supply its LNG plants in such a scenario. Three pipelines currently carry Permian gas across the border, with another in the early permitting stages.
What about the price?
Whatever the demand, natural gas producers must make money. Starting late in 2022, prices for that commodity fell into the $2-per-million British thermal unit (MMBtu) range, and have stayed under $3 since then. Rystad reports that shale gas from Haynesville and others can cover the domestic market at those prices. Exports, however, due to the cost of liquefaction and transportation, require $3-$4 per MMbtu.
In oil-rich basins such as the Permian, Niobrara and Eagle Ford, natural gas is considered to be basically free, because it is a byproduct of producing the oil that drives profitability. Natural gas from these regions is a strong component of LNG exports.
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).
