Global LNG Supply/Demand Predicted to Grow Dramatically in Next Few Years

by Duane Nichols on January 9, 2019

Liquified Natural Gas (LNG) is under high pressure and very low temperature

Report Sees Massive Increase in LNG Demand

From an Article by Marissa Luck, Houston Chronicle, December 17, 2018

PHOTO— A Liberian-flagged tanker named the Maria Energy left Cheniere Energy’s recently completed Port of Corpus Christi facility with the first shipment of liquefied natural gas on the morning of Thursday, December 11, 2018. The shipment marked the first LNG export from Texas.

The world’s biggest buyers of liquefied natural gas will quadruple their uncontracted demand for LNG, and more buyers will be on the hunt for additional LNG soon, too, a report from Wood Mackenzie suggests.

That’s good news for Texas, which is transforming into an LNG export hub as companies tap into cheap natural gas supplies.

By 2030, the seven major LNG buyers are expected to gobble up 80 million metric tons of liquefied natural gas over and above their existing contracts, according to Wood Mackenzie.

Total demand from those buyers, including purchasing LNG on contract and off contract, will grow to 180 million metric tons, up from 150 million metric tons today, the research firm said.

“As China pushes on toward a lower-emission economy, its demand for gas and LNG has grown significantly and we expect the trend to continue in the longer term,” said Wood Mackenzie research director, Nicholas Browne in a statement.

The major seven LNG buyers are clustered in Asia, including China National Offshore Oil Corp., PetroChina, Sinopec, Tokyo Gas, Jera Co. and CPC Corp. Together they account for more than 50 percent of the global LNG market.

“Other traditional major buyers, on the other hand, are facing legacy contract expires and will be on the hunt for a mix of contracts to lower average costs and security in supply sources,” Browne added.

Next year could be a record year for new liquefied natural gas projects too – collectively suppliers could give the green light on LNG investments totaling 220 million metric tons per a year of capacity.

To put that in perspective, nearly 300 million metric tons of liquefied natural gas was traded globally last year — a jump from 100 million metric tons at the start of the century, according to an outlook from Shell.

Several projects are expected to get the green light next year, including the $27 billion Arctic LNG-2 in Russia, at least one project in Mozambique and at least three the U.S. Expansion projects in Australia and Papua New Guinea will also be in the running.

A new report from the U.S. Energy Information Administration earlier this week said the U.S. could more than double its export capacity in the next year to become the third largest LNG exporter behind Australia and Qatar.

In Texas, Cheniere Energy sent out the first LNG export tanker from the state earlier this week. Cheniere’s initial customers for the Corpus Christi facility hold long-term supply contracts from Europe, Asia and Australia.

Cheniere started exporting LNG from the U.S. in 2016, when it sent LNG from its Sabine Pass complex in Louisiana. Dominion Energy of Richmond, Va., also is exporting LNG from Cove Point in the United States, and others are expected to follow in the coming months, including two Houston firms, Kinder Morgan, which is completing an export terminal in Georgia, and Freeport LNG, which will operate a Gulf Coast terminal at Quintana Island.

Companies behind another four export projects on the Gulf Coast —Magnolia LNG, Delfin LNG, Lake Charles and Golden Pass— have federal approvals and are expected to make final investment decisions in the coming months, according to the Energy Information Administration.

Several other companies, including Sempra Energy of San Diego, NextDecade of Houston and Tellurian of Houston, are working on projects expected to start up in the coming years. This week NextDecade scored state permits for its Rio Grande LNG project in Brownsville. And the federal government just released an environmental study on another Brownsville project, Annova LNG, an important milestone in the permitting process.

Browne said 2019 will be “the biggest year ever” in terms of LNG projects advancing and receiving final investment decisions.

“Asia’s major buyers will be at the forefront in ensuring this next generation of LNG supply is brought to market,” he added.

{ 2 comments… read them below or add one }

Forbes Online Magazine January 10, 2019 at 1:11 pm

U.S. Liquefied Natural Gas Hits Record Highs Again

From an Article by General Energy News, Forbes, January 8, 2019

Over the final week of 2018, U.S. feedgas for LNG exports surpassed 5 billion cubic feet per day for the first time ever This is an increase of over 60% for the same time in 2017. LNG is now 4% of total U.S. gas needs and remains our largest incremental market going forward.

Bolstered by an easing of the trade war with China, the largest new gas user in the world (with nearly 15 regasification terminals scheduled to come on line 2020-2023), 2019 will be the “biggest year ever” for U.S. LNG. China was the third-largest buyer of U.S. LNG last year after Mexico and South Korea, despite having no off take agreements.

There are now three U.S. LNG export facilities: Sabine Pass (LA), Cove Point (MD), and Corpus Christi (TX), with the latter just recently began commissioning liquefaction trains in November. There will be six such sites by the end of 2019.

The first half of 2019 will a busy one for the U.S. LNG business. Green lighted final investment decisions for projects over the next six months could eventually inject $20-25 billion into the Gulf Coast region alone over the next four years. And over the next seven years, it is easy to see U.S. LNG gas export capacity exploding to 20-25 Bcf/d. That would be around a quarter of current U.S. gas output.

Truth be told, however, while U.S. gas prices have been their most volatile in around decade over the past 10 weeks, more and more LNG exports to meet growing needs abroad would mean more ups and downs in domestic prices. We know that as the most bullish domestic demand factor, U.S. LNG exports will put a floor under our own market. LNG exports will increasingly become a baseload demand market and are not going to be easy to simply shut off if our own prices rise.

The Industrial Energy Consumers of America has long worried about the potential for huge amounts of gas leaving the country to increase domestic prices, namely since low gas prices are a critical competitive advantage for U.S. manufacturing. “U.S. chemical investments linked to affordable gas surpass $200 billion,” and we just reported the best manufacturing jobs growth in the past 30 years.

Yet, we have a load of shale gas (and oil) to produce, with more affirmation reported in December: “Feds Discover Largest Oil, Natural Gas Reserve in History.” Moreover, LNG exports actually incentivize new domestic gas production especially since our own demand is growing but sometimes not at levels to help producers expand operations.

I must say that I see overregulation over exports as having the biggest potential to increase domestic gas prices. Listening to the rhetoric out there today, I remained convinced that some new and completely unnecessary regulation on gas production and/or transport in the name of “combating climate change” will inevitably be unleashed and increase U.S. gas prices.

This would be a major mistake that would play right into Russia’s gas exporting plans and actually reverse a huge amount of environmental progress that we have already made.

I therefore implore the new Congress to educate themselves, to be fully cognizant of a simple fact: thanks to fracking and the shale gas that it yields, U.S. CO2 emissions are dropping faster than any other nation. For example, the mighty Marcellus shale gas play in Pennsylvania – now responsible for ~30% of all U.S. gas output – has cut the state’s CO2 emissions by a whopping 30% in a decade.

And importantly, we are making such climate improvement without the crippling regulations that Europe has relied upon – with very little result.

As for the global LNG market, 2019 will see a rejuvenated boom after a slowdown in 2018. Buyers are now more willing to sign the long-term contracts that help export projects secure financing. LNG supply should surge 15% this year, with most of that coming from the U.S.

Some 70-80% of new gas demand in the world will be in Asia. There is an ongoing gasification push in the region that will increasingly mean more LNG imports. Sales into Northeast Asia hit a record in December, up 15% from November.

Now, however, uncertainty over global economic growth along with sunken oil prices (which lower prices for indexed LNG sellers) could delay or cancel final investment decisions for new LNG export projects around the world. This could potentially exacerbate a global LNG supply shortage already expected to occur within five years.

Source: Forbes Online News Magazine ….


Mary Wildfire January 11, 2019 at 9:55 am

Here is a Question for all Readers …….

Thirty years from now, if you are still alive, you will very likely be confronted by young people asking something along these lines: Why did you trash the world like this? You knew, even late in the 20th century, what you were doing to the climate, to the oceans, to the places where the last coal and oil and gas were extracted.

Yet you just kept on, as though the future didn’t matter. As though nothing mattered but the money some people could make from continuing this destructive work. What were you thinking? How could you think your own children and grandchildren didn’t matter? Was it lead in your water supply making you crazy, or what?

How will you answer?

Most likely, you’ll lie. They will be understandably angry, and you will say you worked to terminate fossil fuel use and deforestation, you had solar panels on your house and ceased flying….

Mary Wildfire, Roane County, WV


Leave a Comment

Previous post:

Next post: