The Top 10 RBN Energy Prognostications - 2023 Scorecard

Thursday, 12/28/2023 Published by: Rusty Braziel

Excerpt.  Link to full article:  https://rbnenergy.com/the-top-10-rbn-energy-prognostications-2023-s...

These are two top 10 prognostications that cover natural gas and the Haynesville-Bossier shales.  RBN Energy is one of my favorite energy blogs.  It is free to sign up.

The 2023 hiatus on new LNG export-capacity additions will trigger the last oversupplied gas market for a long time to come. By year-end 2022, the outlook for natural gas prices in 2023 was looking bleak. Production was growing fast and, for the first time since 2015, no new LNG export capacity was slated to come online. We predicted grim market conditions, and that’s exactly what we got. For 2023, Henry Hub natgas averaged $2.67/MMBtu for the year, only 40% of the 2022 average. But we put a positive spin on the outlook, looking forward to 2024 when the startup of the Golden Pass LNG project was planned, with the prospects for a number of new LNG export capacity additions over the coming years. Our thesis was that the increase in demand would tighten up domestic natural gas markets after 2023 with a lower probability of oversupply conditions coming back in 2024 and for the foreseeable future — unless, of course, something impeded the timeline for Golden Pass. Which is exactly what happened in early December when ExxonMobil announced the facility would not start producing LNG until 1H 2025. The implication is that the gas market will see at least one more year of bargain-basement prices.

New natural gas pipeline/LNG supply projects are coming to debottleneck the Sabine River crossing. Here we predicted that more natural gas pipeline capacity will be needed between the southeastern corner of Texas and southwestern Louisiana — the Sabine River border between the two states. Our premise was that a lot of LNG capacity is being built on the Louisiana side of the border or in Port Arthur right next door, while significant production growth will be coming from the Texas side (predominantly the Permian and Eagle Ford). We certainly saw the Haynesville as being quite productive (although with growth slowing in the near term due to low gas prices), but even with the Haynesville ramping up with higher prices after 2024, the basin couldn’t single-handedly keep up with all the LNG demand. Well, more pipes to serve Gulf Coast LNG terminals are in the works, with a number of new projects under development. But the fact is that most do not cross the Sabine River. Instead, most move gas north-to-south — an incremental 6 Bcf/d between 2022 and 2026 — on the Louisiana side of the border. The supply to fill these pipes will come from the Haynesville, both the Louisiana and the Texas side (moving from East Texas east into North Louisiana), other Texas gas displacing some supplies still moving westbound, and a bit of incremental gas moving across the Sabine in southeastern Texas. But net-net, the important infrastructure development to meet growing Gulf Coast LNG demand is north-to-south within Louisiana.