EIA Predicts U.S. Natural Gas Consumption Declines This Yr & Next
Here’s a paradox for you that we can’t explain. Last week we reported the latest U.S. Energy Information Administration (EIA) Short-Term Energy Outlook (STEO) predicts natural gas production in the U.S. will hit an all-time high in 2022 (see U.S. NatGas Production in 2022 Forecast to Hit All-Time High). And yet, the same EIA came out with a prediction late last week that natural gas consumption here in the U.S. is declining and will continue to decline in 2022. How does that square?
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Appearing on a Barclay’s energy conference webcast yesterday, Williams CEO Alan Armstrong said his company plans to keep spending around $1.2 billion per year through 2026 to keep growing and expanding. One of the prime drivers of growth and expansion for Williams in the coming years is LNG exports. Feedgas to LNG plants continues to increase. According to S&P Global Platts, U.S. LNG feedgas demand will increase from 10.9 Bcf/d this year to 14.9 Bcf/d in 2026. Williams intends to deliver much of that increased demand to the plants that use it.
According to the experts at RBN Energy, U.S. LNG feedgas demand “has been the single biggest factor behind the soaring natural gas prices and storage shortfall this year.” Feedgas is the gas that feeds LNG export facilities. Two more LNG facilities are due to begin operation in the first half of 2022, both of which have the potential to use Marcellus/Utica molecules. RBN does a deep dive into how LNG export facilities ramp up and when even more feedgas demand will increase.
What’s happening with New Fortress Energy’s (NFE) proposed LNG liquefaction plant planned for Wyalusing, PA? We told you in March the company hasn’t given up on the plan, but for now is focused elsewhere (see 
It’s that time of year again. Annual maintenance along pipelines that feed several major U.S. liquefaction (LNG) facilities will negatively impact gas deliveries to some terminals over the next six weeks according to notices to customers. Pipelines that serve the Cove Point, Maryland LNG facility and the Sabine Pass, Louisiana facility will be affected. Marcellus/Utica gas flows to both facilities.
On Tuesday the U.S. Energy Information Administration reported that due to rising spot demand in both the winter and summer months from Asia and Europe, and lower natural gas prices here in the U.S. versus the price elsewhere, LNG exports in the U.S. hit record hights for the first half of this year. That’s good news for Marcellus/Utica drillers and landowners. LNG exports jumped to an average of 9.6 billion cubic feet per day (Bcf/d) between January and June 2021, up by 42% compared with the first half of 2020.
According to one of our favorite Forbes authors and research analyst, Jude Clemente, “demand for natural gas can only grow.” Right now the world collectively uses 375 billion cubic feet per day (Bcf/d) of natgas. Clemente says demand “is set to grow substantially in the years ahead.” One of the drivers of that growth will be carbon-neutral LNG. What is it and why will it drive more use of natgas? Clemente explains…
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.