Firms make deals to boost LNG exports 60% from U.S., Canada, Mexico
Firms make deals to boost LNG exports 60% from U.S., Canada, Mexico
By Scott DiSavino August 23, 2022 reuters.com
NEW YORK (Reuters) - North American liquefied natural gas (LNG) developers and producers this year have struck deals to sell 48 million tonnes of LNG, which will eventually pump up exports 60% from current levels, although much of the output remains years away.
LNG demand is soaring as the conflict in Ukraine pushes global prices to their highest in at least 14 years. Buyers in Europe have looked West in a move away from Russian gas, and Chinese buyers are striking long-term deals after a pause.
New gas-export plants are being developed across the United States, and Mexico and Canada are poised to join as significant gas exporters, with plants proposed for their west coasts.
Eight North American LNG export terminals are under construction and over a dozen more could receive financial greenlights by 2023. Some buyers have locked in supplies from plants that have not yet been approved for construction, so not every supply agreement may go ahead.
“The dynamics have shifted,” said Charlie Riedl, executive director for trade group Center for Liquefied Natural Gas. “Buyers are trying to lock up firm agreements where they can (to) guarantee that gas is going to be delivered,” he said.
For a factbox on North American LNG export plants, see
This week, European gas prices hit $84 per million British thermal units (mmBtu) and U.S. gas futures on Tuesday topped $10 per mmBtu for the first time since 2008.
‘LONG-TERM ROLE’
Goldman Sachs forecasts global LNG demand to rise about 12% 424 MTPA next year and expects new plants that will supply 156 MTPA to be approved within the next five years.
Growing demand has made the United States this year’s largest LNG exporting nation during the first six months. Approved projects that are expected to begin shipments between 2023-2026 could keep the country in first place.
“It is important for the United States to supply the market to support allies in Europe and Asia and improve the ability of the developing world to access gas,” said Mike Sabel, Venture Global LNG’s chief executive. His firm has entered into agreements to sell 18.5 MTPA of LNG since last September.
Some of the biggest deals are from Chinese firms returning to the U.S. market after a pause over tariff disputes. Late last year, Venture Global LNG struck deals for 11 MTPA with units of China’s Sinopec and CNOOC Ltd. China’s ENN Natural Gas Co signed separate deals last year with Cheniere Energy and Energy Transfer.
Due to the lack of available capacity, some recent deals have involved facilities whose construction have not yet received financial approvals. Those agreements “reinforce our conviction in the long-term role” for LNG in global energy markets, said Tim Wyatt, a Cheniere senior vice president.
For a factbox on recent North American LNG deals, see
But rising demand has led to construction of three new U.S. export projects and several more could be approved in 2023.
“The global energy crisis has been years in the making due to significant underinvestment,” said Octavio Simoes, CEO of Tellurian, which recently started construction on its long-delayed plant in Louisiana.
TOP EXPORTERS
In 2021, top LNG exporters were Australia at 78.5 MTPA, Qatar at 77.0 MTPA, the United States at 67.0 MTPA and Russia at 29.7 MTPA, according to the International Gas Union (IGU), an industry group.
The United States, with vast reserves of shale gas, is on track to produce a record 85 MTPA of LNG this year, according to U.S. government projections.
About 68% of U.S LNG exports went to Europe during the first half of 2022 versus just 35% in all of 2021, according to data provider Refinitiv.
There are four export plants under construction in the United States that will boost the nation’s capacity to produce LNG from 104.6 MTPA now to 156.3 MTPA in 2026.
In addition, two export plants are under construction in Canada and two in Mexico that will add another 20.8 MTPA to North America’s LNG production once all of the facilities enter service by 2027.
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Replies to This Discussion
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Permalink Reply by Steve P on -
I read a very interesting article last week regarding Mexico's plans for LNG plants on its West Coast. According to the article, Mexico now has an impressive pipeline capacity to import gas from the US. As a practical matter, CA, OR and WA have all 3 shut down the notion of LNG plants along their coast, and the associated pipelines needed to fuel any such plants. So, Mexico sees a business opportunity for itself. According to the article, the government will streamline approval of several plants (unlike the US government).
And the ironic thing is that Mexico produces almost no NG, and what it does produce is used for domestic consumption. So, any LNG exported from Mexico LNG facilities will be US produced gas. The facilities on the Pacific coast can export to the Far East, and the shipments can avoid traveling through the Panama Canal, which adds a good deal of cost
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Permalink Reply by Hale Yayuh on
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I saw that article or one like it. Makes me mad that we can't streamline approval and builds of new sites in the USA. How dumb that Mexico can have a profitable enterprise like that using US-produced gas. Duh... we missing the boat. There is a window of opportunity RIGHT NOW. I know they are going as fast as they can in LA and TX but, wow, it takes so long to build a facility here. Like, five years? I saw something recently about some country somewhere using much quicker to build floating LNG export sites. Seems like a good idea, wish we would do it! We could rock and roll with continued boosted nat gas price.
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Permalink Reply by Skip Peel - Mineral Consultant on
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Guys, although governmental approvals are complicated, as they should be, the pace of LNG export capacity expansion has been tied to funding. Numerous LNG export plants have secured or paused their applications for governmental review and authorization because of funding. A number of Final Investment Decisions (FID) have been on hold because of investor and banking concerns over long term global LNG demand. Obviously the war in Ukraine and Europe's reaction has given new impetus to the belief that LNG demand will continue to grow over the coming years. Every time their is a spurt of new construction, investors eventually become concerned with over supply and depressed prices. As has happened previously, a number of companies will rush to get construction underway and those that lag behind may find that investors have become wary and will not provide funding. I think we will see a handful of new export facilities make it to construction in the next year or so. As to Mexico, anyone who bets on Mexico becoming a major LNG exporter is forgetting the decades of bad decisions and failed O&G projects by PEMEX.
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Uh, yep, good point, Skip, about Pemex! And your mentioning funding being the problem makes sense. I understand their hesitation. That's why those floating sites were so intriguing, less time and less cost and I suppose less environmental footprint if you have to pack up and quit! But I've read some pretty convincing reports lately from mainstream sources showing robust nat gas demand for decades. As in out to 2050. And it wouldn't just stop there, that was just the end of the forecast, 30 years.
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Permalink Reply by Skip Peel - Mineral Consultant on
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Floating LNG has been a peripheral player in the global natural gas world for a few years. In my view it is a good investment for the right situations. Island nations with relatively modest volume needs for example. Obviously a land based delivery system (pipelines/compressor stations) is required to transport the gas to end users. Also FLNG still needs LNG ocean transport and the number of LNG carriers is less than what is needed at this time of increasing demand. The number of new LNG carrier orders has gone up significantly last year and this but of course those massive ships take many months to build and place in service.
I have pushed for methane monitoring and reduction of fugitive emissions because I think that tends to extend the period in which the world will rely on natural gas/LNG.
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