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U.S. Is A Net Exporter Of Natural Gas For First Time In 59 Years

LNG

Exports outweigh imports in February, April, May: EIA

The U.S. has been a net exporter of natural gas for three of the first five months of 2017, according to a note released by the EIA. This is historically significant, as February, April and May are so far, the only months in which the U.S has been a net exporter of natural gas since 1958.

Imports from Canada falling

The U.S. natural gas trade is dominated by pipelines, with pipelines from Canada supplying the vast majority of all imported gas. The TransCanada Pipeline was completed in 1958, transporting gas from western Canada to the northeastern U.S. Since then, the U.S. has always imported a great deal of Canadian natural gas. Net gas imports from Canada peaked in 2007, at over 10 Bcf/d. Since then, the U.S. shale boom has begun to replace Canadian gas, and the U.S. has begun to export gas to Canada in significant volumes. The U.S. is still a net importer of gas from Canada, but exports to Canada continue to rise.

(Click to enlarge)

Source: EIA

Declining Mexican production is being replaced by U.S. gas

Natural gas trade with Mexico is much more one-sided, with vastly more exports to Mexico than imports. Gas exports to Mexico are currently nearly at record levels, averaging over 4 Bcf/d in 2017. This value has increased quickly, as in 2010 the U.S. was exporting only 0.91 Bcf/d to its southern neighbor. Similar dynamics are influencing trade with Mexico in both natural gas and refined products. In both cases, Mexican production is declining, while demand is increasing. This creates an opportunity for American fuels to fill the gap, and steady expansion of export infrastructure in the U.S. makes continued export growth likely. Related: Natural Gas Prices Poised To Rise As Exports Boom

(Click to enlarge)

Source: EIA

LNG arrives on the scene

The U.S.’s natural gas with the rest of the world changed profoundly recently, when Cheniere’s (ticker: LNG) Sabine Pass terminal began operation. The facility set a new record of 1.96 Bcf/d in May, as it continues to spool up operations. Three liquefaction trains are currently operational, with a fourth expected to come online in the next few months. Additional expansion of Sabine Pass and a host of other LNG projects in the pipeline mean the U.S. will likely become more of a natural gas exporter in the future.

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