- The United States is set to become the world’s largest LNG exporter next year.
- Due to a number of U.S. LNG projects coming online by the end of 2022, U.S. capacity will increase to 11.4 billion cubic feet per day.
- The return of the long-term supply deals will likely incentivize several low-cost projects to move forward.
The United States will have the world’s largest liquefied natural gas (LNG) export capacity next year, exceeding the capacity of the top LNG exporters Australia and Qatar.
Thanks to a growing number of U.S. LNG export projects coming into service,
by the end of 2022, U.S. nominal capacity will increase to 11.4 billion cubic feet per day (Bcf/d) and peak capacity to 13.9 Bcf/d across 7 LNG export facilities and 44 liquefaction trains, the Energy Information Administration (EIA) said in its latest natural gas weekly update last week.
Thanks to liquefaction trains at Sabine Pass, Cove Point, Corpus Christi, Cameron, Elba Island, Freeport, and Calcasieu Pass, America’s export capacity will exceed in 2022 that of the two current largest global LNG exporters, Australia (11.4 Bcf/d) and Qatar (10.3 Bcf/d).
U.S. LNG export capacity will grow further and peak export capacity is set to jump to 16.3 Bcf/d by 2024, when the eighth export facility—Golden Pass LNG – is expected to start operations, the EIA said.
In just five years since Cheniere’s Sabine Pass exported the first LNG cargo in 2016, the United States has now become the world’s third-largest LNG exporter, behind only Australia and Qatar.
Exports out of the United States have set monthly records this year, as economies rebound from the pandemic and the price of the U.S. benchmark Henry Hub is much lower than the equivalent prices of LNG in Europe and Asia, where the natural gas crunch has pushed prices sky-high in recent months. The U.S. also returned to exporting LNG to China, after a year without U.S. LNG shipments to China between March 2019 and February 2020, due to the trade war.Related: JP Morgan Predicts The End Of Covid, A Strong Economy, And $125 Oil
American exports to China started rising toward the end of last year to reach a record high in August 2021, the latest available EIA data shows.
In September 2021, China was the top destination of U.S. LNG exports, the U.S. Department of Energy’s LNG Monthly for November 2021 showed.
Over the past few weeks, Chinese firms have signed long-term supply deals for U.S. LNG, including a Cheniere agreement with Sinochem Group, and one between Venture Global LNG and Sinopec, which, Venture Global says, will be “the largest single LNG supply deal ever signed by a US company and will double imports of US LNG to China.”
The return of the long-term supply deals—due to the highly volatile and record spot LNG prices in Asia recently—and Asia’s insatiable demand for natural gas will likely incentivize several low-cost projects to move towards sanction over the next 12 months, Gavin Thompson, Vice Chairman, Energy Asia Pacific, at Wood Mackenzie, said last week. These include Cheniere’s Corpus Christi Stage 3 and Venture Global’s Plaquemines project in the U.S., WoodMac says.
This year’s U.S. LNG exports are set to rise by 50 percent compared to 2020, when global demand was low and many American cargoes were canceled, the EIA said in its December Short-Term Energy Outlook (STEO) on Tuesday.
At the same time, the top U.S. natural gas producer, EQT Corporation, said that the criticism of Senator Elizabeth Warren about the higher domestic natural gas prices this year is “misguided.”
Per EIA estimates, U.S. LNG exports will average 9.8 Bcf/d for all of 2021, up by 50 percent from 2020. American LNG exports will average 11.1 Bcf/d from December 2021 through March 2022, and high levels of LNG exports will continue into 2022, averaging 11.5 Bcf/d for the year, up by 17 percent from 2021, if global natural gas demand remains high and U.S. LNG export capacity increases, the EIA said on Tuesday.
Also on Tuesday, EQT Corporation said that Senator Warren’s suggestion that LNG exports or “corporate greed” were contributing to domestic natural gas cost increases was “misguided.”
“Yes, the price of natural gas has increased rapidly relative to 2020 as the economic engines of the world have reignited, but natural gas prices in 2020 were the lowest in over two decades, a year during which we exported LNG. In fact, because of the shale gas boom and companies like EQT, the United States consumer has benefited from, and continues to benefit from, some of the lowest natural gas prices in the world,” EQT President and CEO Toby Rice said in a response letter.
“LNG exports have the potential to be the biggest green initiative on the planet, and it’s not even close,” the top executive of America’s biggest natural gas producer noted.