Rising hydrocarbon production has solidified U.S. energy security in recent years, allowing the country to become a net energy exporter. And robust natural gas production—the so-called “transition fuel”—will allow the U.S. to maintain a leading export position in both the LNG and piped-gas spaces.

Global events have dominated the news in recent years, from the COVID-19 pandemic in 2020 to Russia’s invasion of Ukraine in early 2022. While the former dealt a short-term blow to energy producers globally, the latter has benefitted U.S. shale gas producers and U.S. LNG exporters, and propelled the U.S. to the forefront as a prominent and secure supplier of energy to Europe, Asia and the rest of the world.

The U.S. did not enter the LNG exporting space until 2016, but only three years later, it was established as a net energy exporter, according to the U.S. Energy Information Administration (EIA). U.S. dry gas production—which continues to hover just above 100 Bcf/d with considerable contribution from the Marcellus, Permian and Haynesville shale plays—is expected to continue to anchor current production and support future growth.

LNG exports account for 13-14 Bcf/d of total U.S. dry gas production, while piped-gas exports to Mexico account for 5-6 Bcf/d, the EIA said in September.

The EIA expects U.S. gas production to continue to rise this year and next, as well as through 2050, supporting further rises in LNG exports.

The EIA forecasts annual U.S. gas production to rise 15% to 42.1 Tcf (around 115 Bcf/d) and LNG exports to rise 152% to 10 Tcf (around 27 Bcf/d) between 2022 and 2050.

“Production growth is largely driven by U.S. LNG exports,” the EIA says in its 2023 “Annual Energy Outlook.” “Gas production growth on the Gulf Coast and in the Southwest reflects increased activity in the Haynesville formation and Permian Basin, which are close to infrastructure connecting natural gas supply to growing LNG export facilities.”


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The Paris-based International Energy Agency (IEA) forecasts U.S. gas production to continue to rise but at a slower pace compared to prior years due to lower domestic demand and limited LNG export capacity additions, the agency said in its “Global Gas Security Review 2023,” published in September. “We expect dry gas production to grow by 2% in 2023 and by less than 1% in 2024.”

However, future growth in U.S. gas production will not be without headwinds, especially those associated with lingering midstream constraints, analysts tell Hart Energy.

How did the U.S. become a natural gas production powerhouse so quickly?

Moscow’s decision to invade Ukraine led to a drastic drop in Russian energy exports to Europe and the U.K., which prompted a massive energy crunch. The U.S., with its existing liquefaction capacity and ongoing capacity additions, was able to remedy that. Heavyweight LNG export players Australia and Qatar were unable to rapidly boost LNG shipments to Europe when demand was most pressing.

A combination of factors worked in Europe’s favor in 2022 to help avoid a worst-case scenario which could have seen many countries in the region go dark due to a lack of energy.

The first was a warmer-than-normal winter. The second was Europe’s ability to procure LNG cargoes, primarily from the U.S. This was possible because European countries could afford LNG when prices spiked. Numerous cargoes were diverted from Asia when the region was priced out of the market as energy-starved Europe scrambled to keep the lights on, whatever the cost.

U.S. LNG for the world

The U.S. is well-positioned to continue its fight for dominance with Australia and Qatar. Combined, the three countries accounted for 60% of global LNG output in 2022, according to the International Gas Union’s (IGU) “2023 World LNG Report.”

In 2022, the Aussies took the top spot as the world’s largest LNG exporter (80.9 million tonnes). They were followed closely by the U.S. (80.5 million tonnes) and Qatar (80.1 million tonnes). The fourth and fifth spots were held by Russia (33 million tonnes) and Malaysia (27.3 million tonnes) in the IGU’s ranking.

“The key impact of the energy crisis was the combination of the unprecedented surge in prices and volatility with the similarly unprecedented shift in inter-regional LNG trade patterns,” the IGU said. “LNG volumes from the U.S. accounted for 44% of Europe’s total LNG imports while Europe accounted for 69% of total U.S. LNG exports last year. Moreover, rare cargo movements from Asia- Pacific to Europe, despite being a long distance with high shipping costs, were observed.”

Demand for LNG is expected to remain robust through at least the end of this decade. After that time, the outlook is uncertain, BP said in July in its “Energy Outlook 2023.”

“The U.S. and Middle East [will] establish themselves as the main global supply hubs for LNG exports, with the prospects for Russian LNG exports scarred by the effects of the Russia- Ukraine war,” BP said.

But looking forward, the U.S. will likely face formidable competition from the Middle East and Australia under BP’s net-zero, accelerated and new momentum scenarios, the U.K.-based company said.

“The world is decarbonizing and traditional alliances have fallen apart,” Cornerstone Government Affairs principal Jack Belcher warned in an interview with Hart Energy. “U.S. LNG exporters need to be looking at markets beyond Europe … as the rhetoric coming out of Europe makes you think this is a temporary thing.”

The surge in U.S. LNG exports is just a “Band-Aid for Europe … a temporary thing,” Belcher said.

The energy trilemma

The geopolitical events of 2022 were an unexpected but seemingly necessary reminder that the energy transition to cleaner energies and net-zero emissions must take energy security and affordability into account.

The so-called energy trilemma—which encompasses energy security, affordability and sustainability—transition to be a success, and U.S. LNG and piped-gas exports factor heavily into that equation, BP’s Chief Economist Spencer Dale wrote in the company’s outlook.

The Inflation Reduction Act’s (IRA) $370 billion in investments include some two dozen tax provisions to lower energy costs for American families and small businesses, and accelerate the deployment of clean energy, vehicles, buildings and manufacturing. It provides billions of dollars in investments into grant and loan programs, and other investments for clean energy and climate action.

Growing U.S. gas production, coupled with the IRA, seemingly ensure that U.S. gas producers and exporters continue with efforts to move forward and build on what is already a solid foundation held together by robust U.S. shale production. This production has allowed U.S. gas producers to fulfill domestic gas demand and reduce worries around energy security.

With robust production and excess gas volumes, U.S. gas exporters are now focused on either dominating the U.S. liquefaction space or potentially expanding piped-gas exports to neighboring Mexico, just south of the U.S. border.

Piped gas for Mexico

In the piped-gas space, U.S. exporters continue to fill demand for gas in Mexico, home to sizable hydrocarbon reserves. Gas-short Mexico’s next best option for a lack of domestically produced gas is imported U.S. gas. State-owned Petróleos Mexicanos (Pemex) has experienced difficulty boosting production owing to financial commitments tied to the government in the form of payments and investments in strategic projects.

Future plans to build out Mexico’s liquefaction capacity—to around 32 million tonnes per annum, according to Rystad Energy, or upward of 45 million, according to BTU Analytics—will only be possible with continued and higher volumes of U.S. piped gas.

And combining U.S. piped-gas exports to Mexico with potential demand tied to the Mexican LNG projects, gas volumes sent to Mexico could serve as a significant driver to boost exports and nearly double them over the short-to-medium term compared to the EIA’s figures.

But U.S. producers’ dreams to feed nine planned Mexican liquefaction plants continue to be overshadowed by a lack of pipeline transport capacity south of the border.