LNG
Dr. M. Ray Perryman, Sept. 13, 2023
The United States now exports more liquefied natural gas (LNG) than any other country. It’s a relatively new development, with Australia and Qatar usually topping the rankings in the past. The volume of US exports has surged over the past few years, with major new facilities coming online and strong global demand. While Australia and Qatar volumes have been fairly stable since 2018, US exports have basically quadrupled.
LNG exports during the first half of 2023 averaged 11.6 billion cubic feet per day (Bcf/d), up 4% compared to the first six months of 2022 (due primarily to Freeport LNG’s restart after an incident last year). Australia was second, averaging 10.6 Bcf/d, followed by Qatar at 10.4 Bcf/d.
Europe and the UK are the principal destinations for US exports. In fact, just five countries (the Netherlands, the UK, France, Spain, and Germany) imported more than one-half of US LNG. Russia’s invasion of Ukraine and the resulting shutdown of Russian natural gas supplies to Europe have contributed to notable short-term expansion in regassification capacity, with Germany’s imports beginning just this year and other European countries increasing capabilities. Other important export markets are Japan, South Korea, India, China, Argentina, and Brazil.
From an economic perspective, the primary effect of liquefaction technology is transforming natural gas from a domestic market limited by pipeline infrastructure to an international phenomenon. The development of the global LNG market enhances security by enabling Europe and other nations to purchase fuels from reliable allies on a continuing basis. In addition, gas-fired power plants involve dramatically lower emissions than the coal-fired units that countries such as Germany were forced to utilize last winter as Russian gas supplies dwindled.
Texas and the Gulf Coast play a crucial role in the LNG market. For the 12 months ended June 2023, US LNG exports totaled over 3.9 trillion cubic feet (Tcf). Of that amount, about one fourth was produced in Texas, with 743.8 Bcf in Corpus Christi and another 231.1 Bcf in Freeport (which was only in operation for five months). Two Louisiana facilities in Sabine Pass and Cameron accounted for another 66% of US exports. Our firm has performed the regulatory analysis for most of these facilities, and more capacity is in various stages of completion.
The continued development of the LNG market helps ensure that people around the world have adequate power and heat despite the shenanigans of Russia and other like-minded nations. In addition, natural gas is clean burning compared to existing alternatives such as coal and has a definitive role in ensuring an affordable and reliable supply of power as renewables develop. Although prices are low at the moment due primarily to excess supplies, long-term demand throughout the world will assure sustainability and future investment.
Stay safe!