Report: Natural gas to continue to surge on the world market
The world’s biggest buyers of liquified natural gas will quadruple their uncontracted demand, and more buyers will be on the hunt for additional LNG soon, according to a report from Wood Mackenzie.
That’s good news for Texas, which is transforming into an LNG export hub as companies tap into cheap natural gas supplies.
By 2030, the seven major LNG buyers are expected to gobble up 80 million metric tons of liquefied natural gas over and above their existing contracts, according to Wood Mackenzie. Total demand for those buyers, including pur-
chasing LNG on contract and off contract, will grow to 180 million metric tons, up from 150 million metric tons now, the research firm said.
“As China pushes on toward a lower-emission economy, its demand for gas and LNG has grown significantly, and we expect the trend to continue in the longer term,” Wood Mackenzie research director Nicholas Browne said in a statement.
The major seven LNG buyers are clustered in Asia, including China National Offshore Oil Corp., PetroChina, Sinopec, Tokyo Gas, Jera Co. and CPC Corp. Together they account for more than 50 percent of the global LNG market.
“Other traditional major buyers, on the other hand, are facing legacy contract expires and will be on the hunt for a mix of contracts to lower average costs and security in supply sources,” Browne added.
Next year could be a record year for new liquefied natural gas projects, too. Collectively, suppliers could give the green light on LNG investments totaling 220 million metric tons per a year of capacity.
To put that in perspective, nearly 300 million metric tons of liquified natural gas was traded globally last year — a jump from 100 million metric tons at the start of the century, according to an outlook from Shell.
Several projects are expected to get the green light next year, including the $27 billion Arctic LNG-2 in Russia, at least one project in Mozambique and at least three in the U.S. Expansion projects in Australia and Papua New Guinea will also be in the running.
A new report from the U.S. Energy Information Administration released this week said the U.S. could more than double its export capacity in the next year to become the third-largest LNG exporter behind Australia and Qatar.
In Texas, Cheniere Energy sent out the first LNG export tanker from the state earlier this week. Cheniere’s initial customers for the Corpus Christi facility hold long-term supply contracts from Europe, Asia and Australia.
Cheniere started exporting LNG from the U.S. in 2016, when it sent LNG from its Sabine Pass complex in Louisiana. Dominion Energy of Richmond, Va., also is exporting LNG from the United States, and others are expected to follow in the coming months, including two Houston firms, Kinder Morgan, which is completing an export terminal in Georgia, and Freeport LNG, which will operate a Gulf Coast terminal at Quintana Island.
Companies behind another four export projects on the Gulf Coast — Magnolia LNG, Delfin LNG, Lake Charles and Golden Pass — have federal approvals and are expected to make final investment decisions in the coming months, according to the Energy Information Administration.
Several other companies, including Sempra Energy of San Diego, NextDecade of Houston and Tellurian of Houston, are working on projects expected to start up in the coming years.
This week, NextDecade scored state permits for its Rio Grande LNG project in Brownsville. And the federal government just released an environmental study on another Brownsville project, Annova LNG, an important milestone in the permitting process.
Browne said 2019 will be “the biggest year ever” in terms of LNG projects advancing and receiving final investment decisions.
“Asia’s major buyers will be at the forefront in ensuring this next generation of LNG supply is brought to market,” he added.