Posted Oct 4, 2022, 6:15 AM
The warnings will not prevent the wave which is announced, in the United States, in the liquefied natural gas (LNG). Enticed by the sharp rise in European demand and despite long-term uncertainties, American producers are investing massively in new infrastructure. Three major projects under construction on the Gulf Coast are expected to increase U.S. capacity by more than 50% by 2027.
According to the U.S. Energy Information Agency, the three projects under construction alone at Golden Pass and Corpus Christi Stage III in Texas, and Plaquemines in Louisiana are expected to boost U.S. LNG exports by $11.1 billion. cubic feet (314 million cubic meters) per day to 17 billion cubic feet (481 million m3) per day. S&P even expects these exports to double, to 22 billion cubic feet (623 million m3). Capacities could, in fact, be boosted by integrating possible projects on the East Coast and by optimizing existing infrastructures.
An uncertain strategy
Golden Pass, developed 70% by QatarEnergy and 30% by ExxonMobil, should make this region, straddling Texas and Louisiana, the global epicenter of LNG. It will be added to Sabine Pass, which is already the largest LNG terminal in the world with an annual capacity of 55 million tonnes, only 5 kilometers away as the crow flies. The shareholders have invested 10 billion dollars in this gigantic project to reverse the flows: originally designed to import Qatari gas, it will come to increase American liquefaction and export capacities.
The Atlantic coast is not to be outdone, even if it starts from further away. Several projects exist in Maryland, Delaware or Pennsylvania, but they face stronger resistance from local communities and increased skepticism from experts. These projects, whatever happens, will not be ready for another six to seven years.
By then, European demand for LNG could have fallen sharply. “Europe’s needs are high in the short term but extremely uncertain beyond 2030,” researchers from the Center for Global Energy Policy at Columbia University recently pointed out. Many questions remain about Europe’s willingness to commit to significant volumes, in long-term contracts, given its desire to accelerate its energy transition. »
The carbon footprint of American LNG, due to its transport and because a large part comes from shale gas, is thus significantly higher than that of fossil gas.
Capacities almost at the maximum
Despite the uncertainties, several companies are expected to submit applications for the construction of projects on the East Coast in the coming months. One of them, Penn LNG, hopes to seduce Europeans with shorter contracts, over fourteen or fifteen years (instead of twenty years, more common in the industry).
The United States has become the world’s leading gas producer… and the leading LNG exporter barely six years after entering the world market. This year, these exports were directed in priority to Europe, after an agreement between Brussels and the Biden administration, and because of the slowdown in Asian demand, Chinese in particular. Imports of American LNG into Europe and the United Kingdom jumped 63% in the first half.
In the short term, however, the United States will find it difficult to meet the growing demand for LNG in Europe and a possible recovery in Asia: in the first six months of the year, American installations have already been running at 87% their abilities.
