• 1 day PDVSA Booted From Caribbean Terminal Over Unpaid Bills
  • 1 day Russia Warns Ukraine Against Recovering Oil Off The Coast Of Crimea
  • 1 day Syrian Rebels Relinquish Control Of Major Gas Field
  • 1 day Schlumberger Warns Of Moderating Investment In North America
  • 1 day Oil Prices Set For Weekly Loss As Profit Taking Trumps Mideast Tensions
  • 1 day Energy Regulators Look To Guard Grid From Cyberattacks
  • 1 day Mexico Says OPEC Has Not Approached It For Deal Extension
  • 1 day New Video Game Targets Oil Infrastructure
  • 1 day Shell Restarts Bonny Light Exports
  • 2 days Russia’s Rosneft To Take Majority In Kurdish Oil Pipeline
  • 2 days Iraq Struggles To Replace Damaged Kirkuk Equipment As Output Falls
  • 2 days British Utility Companies Brace For Major Reforms
  • 2 days Montenegro A ‘Sweet Spot’ Of Untapped Oil, Gas In The Adriatic
  • 2 days Rosneft CEO: Rising U.S. Shale A Downside Risk To Oil Prices
  • 2 days Brazil Could Invite More Bids For Unsold Pre-Salt Oil Blocks
  • 2 days OPEC/Non-OPEC Seek Consensus On Deal Before Nov Summit
  • 2 days London Stock Exchange Boss Defends Push To Win Aramco IPO
  • 2 days Rosneft Signs $400M Deal With Kurdistan
  • 3 days Kinder Morgan Warns About Trans Mountain Delays
  • 3 days India, China, U.S., Complain Of Venezuelan Crude Oil Quality Issues
  • 3 days Kurdish Kirkuk-Ceyhan Crude Oil Flows Plunge To 225,000 Bpd
  • 3 days Russia, Saudis Team Up To Boost Fracking Tech
  • 3 days Conflicting News Spurs Doubt On Aramco IPO
  • 3 days Exxon Starts Production At New Refinery In Texas
  • 4 days Iraq Asks BP To Redevelop Kirkuk Oil Fields
  • 4 days Oil Prices Rise After U.S. API Reports Strong Crude Inventory Draw
  • 4 days Oil Gains Spur Growth In Canada’s Oil Cities
  • 4 days China To Take 5% Of Rosneft’s Output In New Deal
  • 4 days UAE Oil Giant Seeks Partnership For Possible IPO
  • 4 days Planting Trees Could Cut Emissions As Much As Quitting Oil
  • 4 days VW Fails To Secure Critical Commodity For EVs
  • 4 days Enbridge Pipeline Expansion Finally Approved
  • 4 days Iraqi Forces Seize Control Of North Oil Co Fields In Kirkuk
  • 5 days OPEC Oil Deal Compliance Falls To 86%
  • 5 days U.S. Oil Production To Increase in November As Rig Count Falls
  • 5 days Gazprom Neft Unhappy With OPEC-Russia Production Cut Deal
  • 5 days Disputed Venezuelan Vote Could Lead To More Sanctions, Clashes
  • 5 days EU Urges U.S. Congress To Protect Iran Nuclear Deal
  • 5 days Oil Rig Explosion In Louisiana Leaves 7 Injured, 1 Still Missing
  • 6 days Aramco Says No Plans To Shelve IPO
Alt Text

The Natural Gas Market Is Set To Boom

With the new lower-for-longer oil…

Alt Text

The U.S. LNG Boom Could Be About To Stall

United States LNG has seen…

Gregory Brew

Gregory Brew

Gregory Brew is a researcher and analyst based in Washington D.C. He is currently pursuing a PhD at Georgetown University in oil history and American…

More Info

Can The U.S. Dominate LNG Markets?

Colorado LNG

American energy exports hit a new high in early 2017, contributing 7 million barrels of crude to markets abroad in the first week of February. Meanwhile, total shipments of LNG from the Sabine Pass terminal in Louisiana in 2016 stood at 183.77 billion cubic feet (bcf), or around 2.9 million tons(MT). That means that on average, U.S. crude oil exports have reached 1 million bpd, while the prospects for increased LNG exports seem strong, with new LNG terminals being constructed and others getting federal approval.

The key question, however, is whether demand for U.S. export products is sustainable, or whether the market is already oversupplied. Fears of an apparent glut are being played down by certain industry actors, those with the biggest stake in preserving access to exports.

The Department of Energy report on LNG exports indicated most LNG shipments departing the U.S. were bound for three South American countries: Chile (10 cargoes), Argentina (6 cargoes) and Brazil (4 cargoes). Also high on the list was Mexico, which received 9 cargoes and India, with 5 cargoes. China, which is expected to be big market for U.S. LNG, received 6 cargoes, though overall shipments to Asian markets increased disproportionally in Q4 of 2016, taking up more than 60 percent of total shipments, according to the EIA. Related: Record Gasoline Glut Is Causing Problems On The East Coast

The fact that South America, rather than Asia, received the bulk of shipments from Sabine Pass surprised some analysts in 2016. Yet the high demand and generally higher prices (not to mention lower competition from LNG suppliers Australia and Qatar) made South American markets attractive.

Shell, which bet big on LNG when it acquired BG Group for $50 billion last year, released its first LNG Outlook report on 20 February. Naturally, the outlook was positive: Shell predicts strong LNG growth, with total LNG trade increasing by fifty percent by 2020. Shell believes LNG demand will grow by 4-5 percent every year through 2030.

The oil major sees imports from India and China rising substantially by 2020, while LNG will capture more of the European gas market, capturing demand growth from gas imports from Russia. The company believes that the LNG market, long-dominated by long term contracts that often fail to reflect changes in price, will be replaced by shorter-term contracts. A Shell spokesperson on 20 February denied reports that the LNG market was oversupplied.

Other LNG proponents are equally jazzed about the long-term prospects of American energy exports. Charif Souki, founder and former CEO of Cheniere, which built and manages the Sabine Pass export terminal, is planning a host of new LNG facilities through his new company, Tellurian Inc. With recent investment from GE and Total, Souki is confident that the U.S. will act as the world’s anchor for LNG prices. Related: Unsatisfied With Oil Prices, Iraq Calls For New OPEC Meeting

BP is also confident that the U.S. will play an important role in LNG’s future. The company’s widely-read Energy Outlook for 2017 predicts U.S. LNG supply will grow by 19 bcf per day over the next 20 years. Assuming domestic U.S. demand for natural gas will continue to be met locally, this would allow the U.S. to become the world’s pre-eminent LNG exporter, as LNG’s share of the total export market grows by fifty percent by 2035. The U.S. is set to become the world’s marginal supplier, as Australian products fill Asian markets while the U.S. dominates Europe, South and Central America, according to BP.

The Energy Information Administration (EIA) joined the LNG bulls with a report on 22 February that predicted gas exports to be a prime driver of total U.S. natural gas production after 2018. Despite the surging exports from Sabine Pass, the U.S. remains a net importer of natural gas, but that will change, according to the EIA, when new terminals come on line in 2018 and after. While pipeline exports to Mexico and Canada will play a role, LNG exports will far and away account for most of export growth by 2040. Net exports will reach 10 bcf per day by 2040, while total natural gas production will exceed consumption by 8 bcf per day.

While concerns over U.S. crude exports focus on the persistent fears of a glut in the world market, made all the more apparent by massive inventory gains, a great deal of enthusiasm seems to surround American LNG prospects, as well as the prospects for the LNG market as a whole. Whether those predictions prove to be accurate, and LNG truly does overcome the year-long fears of oversupply, only time will tell.

By Gregory Brew for Oilprice.com

More Top Reads From Oilprice.com




Back to homepage


Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News