The U.S. will meet about 30% of total global LNG demand by 2030, although reliance on four key Lower 48 basins could create midstream constraints, Shell revealed in its “Shell LNG Outlook 2024.”

The London-based company warned that the global gas market is increasingly exposed to U.S. risks—particularly a reliance on U.S.-based liquefaction plants that source LNG feed gas from four basins: Appalachia (which includes the Marcellus and Utica shales), the Permian and Haynesville Shale in the U.S. and the Montney in Canada, according to Shell’s Feb. 14 annual industry update.

The U.S. emerged as the world’s largest LNG exporter in 2023, shipping 86 million tonnes (MMtonne). The second largest exporter was Australia, followed by Qatar, Russia and Malaysia.

However, U.S. LNG exporters have been plagued recently by outages at Freeport LNG and offtake issues related to Venture Global LNG, as well as the recent Biden administration’s pause on approving U.S. LNG exports.

Shell said global LNG trade reached 404 MMtonne in 2023, up 2% compared to 397 MMtonne in 2022, with tight LNG supplies constraining growth while maintaining prices and price volatility above historic averages.

Despite a well-supplied global market in 2023, the lack of Russian pipeline gas supply to Europe — and a limited amount of LNG supply growth over the last year — means that the global gas market remains structurally tight, Shell said. In 2024, U.S. supply and Asian demand will lead LNG market growth. Europe will also rely on LNG to meet its natural gas supply needs, despite a consensus for falling gas demand.

Deals with the Qataris and Americans dominate long-term contracting as Brent and Henry Hub indexation underscores three commercial structures: Henry Hub prices indexed LNG, oil price indexed LNG and spot price LNG, according to Shell.

LNG buyers continue to pursue long-term supply for energy security, and the three-year upswing between 2021-2023 in contracting demonstrates the industry’s commitment to LNG. The dominant buyers during the past three years have been China and Europe. The preferred terms for the deals has been 11 years to 20 years.

“China is likely to dominate LNG demand growth this decade as its industry seeks to cut carbon emissions by switching from coal to gas,” said Shell Energy Executive Vice President Steve Hill in a press release. “With China’s coal-based steel sector accounting for more emissions than the total emissions of the U.K., Germany and Turkey combined, gas has an essential role to play in tackling one of the world’s biggest sources of carbon emissions and local air pollution.”

Shell said gas demand has already peaked in some regions of the world like Europe, Japan and Australia but continues to rise globally. Peak gas demand in the U.S. and South America is not expected until the 2030s, while South Africa and China will see gas demand peak in the 2040s. Thereafter peak gas demand for Nigeria, India, Indonesia and Russia is expected until the 2040+, according to Shell.

By 2040, global LNG demand is expected to rise by more than 50% by 2040 as industrial coal-to-gas switching picks up in China, and South Asian and South-east Asian countries use more LNG to support economic growth. LNG demand is expected to reach 625 MMtonne to 685 MMtonne per year in 2040, according to the latest industry estimates.

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