US natural gas production, exports set records

Surging shale drilling has led companies in the United States to top records for both natural gas production and exports.

The U.S. Energy Information Administration this week detailed the trends, showing total U.S. natural gas production last year at a record high of 90.9 billion cubic feet per day. December marked the highest recorded monthly rate of 96.7 billion cubic feet per day.

Strong production has led to relatively low natural gas prices, but it also has opened up new markets, providing for a jump in natural gas use in electricity generation, chemicals operations and exports.

Increased U.S. production, growing global demand and the addition of liquefied natural gas export terminals allowed the country to become a net exporter last year for the first time in almost 60 years.

The United States for decades has exported natural gas through pipelines to both Mexico and Canada, but imports from Canada historically have far outpaced all exports.

Pipeline exports have increased over the past few years, but the addition of liquefied natural gas export terminals opened U.S. producers to a global market and allowed the country to become a net natural gas exporter.

U.S. LNG exports averaged 1.9 billion cubic feet per day in 2017, up from 500 million cubic feet per day one year earlier.

All aboard!

Houston-based Cheniere Energy’s Sabine Pass last year became the country’s first operational liquefied natural gas exporting facility, with an initial capacity of about 700 million cubic feet per day. The facility’s fourth liquefaction unit, or train, became operational in August, boosting the LNG export capacity of the facility and the country to 2.8 billion cubic feet per day.

Cheniere’s fifth train is under construction, along with five other LNG projects nationwide. Those projects all are expected online by the end of 2019 in a move that would increase the country’s export capacity to 9.6 billion cubic feet per day, or about 12 percent of the country’s average daily production of about 78 billion cubic feet in 2016, according to EIA statistics.

While more LNG projects are expected online over the next few years, demand for export pipelines also is growing.

Raymond James & Associates analyst Pavel Molchanov last month said natural gas exports to Mexico are likely to grow another 50 percent by 2020.

The United States exported about 800 million cubic feet per day in 2010, but that number surged to 4.2 billion cubic feet per day early this year. Molchanov said he expects exports to Mexico to increase to 6.2 billion cubic feet per day by 2020.

Growing export demand is essential for a U.S. natural gas industry with more product than it can handle. While producers in the Pennsylvania-area Marcellus Shale and the Ohio-area Utica are drilling for natural gas, producers in much of Oklahoma, Texas and North Dakota are recovering vast amounts of natural gas essentially as a byproduct of oil.

Export demand and infrastructure has helped create a market for that excess natural gas.