Yves here. Keep in mind how disastrous underwhelming LNG output growth would be for the US and even more so for Europe. Europe is in such desperate shape that its leaders are focused on how to get through this winter, energy-wise, when unless they kiss and make up with Russia (vanishingly unlikely), Europe will suffer a massive, permanent reduction in its standard of living. There is not enough LNG available to make up for the energy shortfall, even before getting to the wee problem of insufficient tanker capacity and high cost.
And in the longer term, remember that shale gas wells have very short productive lives (or more accurately, high flow in the first couple of years, then a long tail of very low output). US shale gas output overall was forecast to peak in the early 2030s, slowly diminish over the decade, and fall more rapidly in the late 2030s.
By Charles Kennedy, a writer for OilPrice. Originally published at OilPrice
While American LNG is poised for long-term growth, next year could see a slowing of domestic natural gas demand due as infrastructure and expansion plans experience limitations, Natural Gas Intelligence reports, citing experts on the sidelines of a Gulf Coast energy forum.
Central for Liquefied Natural Gas (CLNG) executive director Charlie Riedl told NGI that while LNG dynamics are expected to accelerate this decade, buoyed by Russia’s invasion of Ukraine, facility and pipeline expansion will be “mission critical”, with a focus on connecting the Permian Basin and the Haynesville Basin to LNG export terminals.
Experts note that while new projects are underway, the timing will see a lag.
The Freeport LNG export facility continues to be out until at least early November after a fire in June. When it does restart, it would return some 2 billion cubic feet per day to the market. Aside from that, however, experts told NGI that no other expansions of export capability are on the books for two years, with Exxon’s Golden Pass LNG–in cooperation with QatarEnergy–not slated for initial startup until 2024.
Right now, the market is gearing up for a slight pause as LNG expansion catches up with the longer-term prospects here.
Speaking on the sidelines of the three-day forum, Easy Daley Analytics’ Rob Wilson told NGI that Gulf Coast LNG export capacity is set to increase gradually through 2025, but that slower near-term expansion growth could impact natural gas producers as new projects lag behind market dynamics.
“I think it will be March and April, when storage ramps up, and we see levels reach significantly above historical averages,” Wilson told NGI.
For 2023, Wilson predicts that while demand from Asia and Europe will continue to be high, U.S. natural gas producers will see lower prices as the market waits for demand to catch up with supply.