LNG Exports Play Starring Role in Current High Price of NatGas
The natural gas markets just made a bit of history. Friday, July 2nd, marked the last day in a series of nine days that the NYMEX futures price for natural gas increased from the previous day. Beginning Monday the price has slide down just a bit. Nine straight trading days of higher natgas prices is the longest period of day-over-day price rises in the past 20 years! The weather certainly had a lot to do with the increase in prices, but a key part, perhaps the starring role in why prices have continued to climb, is the role of LNG exports.
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According to Bloomberg, the world’s importers of natural gas are waking up to a stark realization: “there isn’t enough supply to go around.” Our long, cold winter (so much for “global warming”) coupled with a warm and toasty summer has (a) depleted natural gas supplies, and (b) will keep those supplies low going into next winter. Despite all the blabbering from Europe and Asia about switching to so-called renewable energy sources, the stark fact is that natural gas supplies more heat and electricity to the world than any other single source. Period. Sooner or later the left must deal with reality and pull their collective heads out of their… fantasies.
Cheniere Energy Inc., the biggest LNG exporter in the U.S., is using its bigness to lean on natural gas drillers (in the upstream) and pipeline companies (in the midstream) to “clean up the natural gas supply chain.” How? To force drillers and pipelines to get their operations to so-called net zero carbon emissions sooner rather than later. Given the fact Cheniere buys up 7-8% of ALL natural gas supplies in the country on any given day, they can and are throwing their weight around to force others to do what they want. The LNG tail is wagging the natural gas dog.
One of our favorite Forbes contributors, Jude Clemente, has written an article detailing how LNG (liquefied natural gas) usage worldwide along with exports from the United States, have both come roaring back now that the pandemic is beginning to appear in the review mirror. There is a fantastic chart in the article (below) identifying the 12 biggest U.S. LNG importers by country. The number one importer may or may not surprise you: South Korea. We bet the number two importer will surprise you (it did us)…
LNG (liquefied natural gas) exports are an important and growing market for Marcellus/Utica natural gas. Two LNG export facilities currently export 100% M-U molecules: Cove Point, Maryland, and Elba Island, Georgia. However, our molecules make their way via a network of pipelines to several Gulf Coast LNG export facilities too, including the largest LNG export facility in the U.S., Cheniere Energy’s Sabine Pass. But is there a cloud on the horizon that threatens even more M-U gas from being liquefied and exported? Perhaps, and it comes from Alaska.
Pieridae Energy’s Goldboro LNG project, located in Nova Scotia (with the potential to export Marcellus/Utica molecules) has been on our radar for years. Nine years to be exact. In August 2020 Pieridae hired a senior VP to run the project, an indicator the company is serious about building it (see 
For nearly every year of the past 20+ years, there has been a reliable, year-in-and-year-out #1 export (in dollar revenue) from the United States to the rest of the world. Care to hazard a guess what it has been? Aircraft, mostly from Boeing. The U.S. has a new most-valuable export in 2021 that has flown on by aircraft exports: Natural gas. The fact that natgas has dethroned aircraft exports does not square well with rabid American leftists who seek to destroy all fossil fuel markets, including natural gas. The vaunted position of natgas also presents a problem for the Biden administration and their plans to slip AOC’s Fat Green Deal through under the disguise of an “infrastructure and jobs” plan.
Cheniere Energy, the biggest LNG exporter operating in the U.S., published a “Climate Scenario Analysis Report” last week (full copy below). The report analyzes the long-term resilience of Cheniere’s business and the potential implications for LNG supply and demand in various future climate scenarios through 2040. Cheniere predicts LNG demand and exports to continue growing through 2040, but after that, LNG will decline due to continued global action to reduce so-called greenhouse gas emissions.
Last week a group of U.S. Senators, including John Kennedy (R-La.), Ted Cruz (R-Texas), Jim Inhofe (R-Okla.), Shelley Moore Capito (R-W.Va.), and Kevin Cramer (R-N.D.), introduced the Natural Gas Export Expansion Act. The bill, if it becomes law, will remove regulatory bottlenecks for LNG (liquefied natural gas) and increase LNG exports to the more than 160 countries in the World Trade Organization.
