U.S. could become net exporter of natural gas
Increased sales, new markets, import decline help fuel paradigm shift
The U.S. could become a net exporter of natural gas in 2018 for the first time since 1957 due to increased sales to Mexico, the opening of new markets through liquefied natural gas and declining imports from Canada, according to the U.S. Department of Energy.
The United States is shipping LNG to at least 20 foreign markets, the Energy Department said, and exports of LNG will continue to grow as terminals on the Gulf Coast reach capacity and companies expand or develop new terminals.
The Houston company Cheniere has been exporting LNG since early 2016 and plans to expand its Sabine Pass complex and open a terminal in Corpus Christi by 2019. Two other Houston companies, Freeport LNG and Kinder Morgan, are scheduled to begin exporting liquefied natural gas later this year, Freeport LNG out of its Quintana Island terminal and Kinder Morgan out from its Elba Island LNG project in Georgia.
Sempra Energy expects to start up its Cameron LNG project in Louisiana in 2019. Several companies, including Tellurian of Houston, the venture of Cheniere founder Charif Souki, have proposed Gulf Coast projects that would launch operations on the next decade.
These projects are part of the transformation of Houston and the Gulf Coast into a global hub of energy exports, the result of booming U.S. production unleashed by the so-called shale revolution. U.S. crude exports — prohibited until late 2015, when Congress lifted a 40-year ban — have surged, hitting 1.7 million barrels a day in October, according to the Energy Department.
Most of it is moving through of Houston. Through the first 11 months of 2017, about 75 percent of U.S. crude exports was shipped from the Port of Houston, according to WiserTrade, a nonprofit research group that tracks U.S. trade.
Natural gas exports have helped support domestic natural gas prices, the Energy Department said. Natural gas spot prices averaged $3.01 per million British thermal units last year — about 50 cents higher than in 2016, when prices reached a near-20-year low.
Higher prices contributed to a decline in domestic consumption of natural gas in 2017. It fell 6 percent from 2016, the Energy Department said. Higher natural gas prices meant fewer power plants switched to other fuels to generate electricity.
Exports of natural gas — much of it produced in Texas shale fields — to Mexico are expected to grow quickly as the country shifts its power production to the cleaner burning fuel. Pipeline capacity to Mexico is projected to nearly double by 2019.
Additional growth in natural gas pipeline exports to Mexico, however, will be contingent on the timely completion of Mexico’s connecting pipelines, which so far have experienced construction delays, according to the Energy Department.
U.S.-marketed natural gas production increased by about 1 percent in 2017, according to EIA’s preliminary estimates for the year. Regionally, natural gas production growth was concentrated in Appalachia— primarily in the Marcellus and Utica shales. Other regions have also increased production, including the Anadarko region in Texas and Oklahoma and the Bakken region in North Dakota.
These projects are part of the transformation of the Gulf Coast into a global hub of energy exports.