US Increased Exports of LNG


 

For a number of years now Qatar and Australia have been the leading exporters of natural gas throughout the world. Global gas demand has been predicted to grow by 1.6 percent a year for the next five years; meaning demand is on track to hit almost 460 billion cubic meters (bcm) by 2022.

According to a recent report from the International Energy Agency (IEA), United States exports of liquefied natural gas is on pace to be the worlds number 2 exporter by the end of 2022, providing more than one-fifth of global gas output.

The United States is already the worlds largest producer of natural gas, and with more than half of the natural gas produced expected to be converted to liquefied natural gas for export the IEA has said the US will challenge Qatar and Australia as the highest exporter.

“The U.S. shale revolution shows no sign of running out of steam and its effects are now amplified by a second revolution of rising LNG supplies,” IEA Executive Director Fatih Birol said in a statement Thursday.

Three major LNG terminals are currently under construction on the Texas coast, costing tens of billions of dollars, look to double the number of US ports currently in use.

Just recently the US sent their first LNG shipment to central Europe, in a delivery to Poland. Much of central Europe has been seeking for alternative sources for their energy needs as they try to reduce their reliance on Russian gas. Last week, the US sent its first LNG shipment to the UK, which will provide about half of the country’s gas needs for this summer.

“The ability of the gas fields in the US to provide large quantities at competitive prices will be the most important feature [of the gas market], not only to keep gas competitive for US power generation and industry customers, but also to further increase pipelines exports to Mexico, Canada and deliver LNG to the global market,” said Keisuke Sadamori, director for energy markets and security at the IEA.

According the IEA report, future demand for LNG is expected to be driven by the industrial sector, as its traditional use in power generation continues to be replaced by various renewable sources. The majority of demand growth is expected to come from Asia, with China alone anticipated to account for more than 40 percent of the global demand; driven by China’s evolving government policies looking to reign in the dangerous levels of air pollution throughout various cities, largely caused by coal power stations.

“Especially in China, and more and more other Asian countries, gas is being used in order to reduce the coal and address the local pollution issue,” said Fatih Birol, executive director at the IEA.

The report also adds that the increased liquefaction capacity has created a surplus, forcing global prices down attracting new players in the market such as Pakistan, Thailand, and Jordan.

With Australia, Qatar, and the US investing more resources and capital into the LNG industry, global LNG export capacity could reach 650 bcm a year by the end of 2022, compared to less than 452 bcm a year in 2016. Right now the US is limited to a capacity of about 14 bcm a year now, but is forecasted to add ~90 bcm a year as the industry continues to develop.

Qatar announced last week their plan to raise its LNG output by 30 percent, ~140 bcm a year, in the next 5-7 years in an attempt to challenge other exporters. Qatar currently accounts for ~30.1 percent of the global market, capturing nearly 70 percent of the new African demand. Australia is currently  the worlds second largest LNG producer, accounting for 16.4 percent of supply in 2016.

The IEA has said they expect global gas production to grow faster than oil and coal in the next five years, because of its low price and increased supply, paired with its lower emissions compared to other fossil fuels.

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