A Crucial Moment Arrives for U.S. LNG Exports -- Journal Report
03 Décembre 2018 - 9:17PM
Dow Jones News
By Christopher M. Matthews
With global demand for liquefied natural gas accelerating, 2019
is shaping up to be a pivotal year for LNG exporters in the U.S. A
number of them will soon decide whether to move ahead with
multibillion-dollar projects to ship the bounty of American shale
to foreign markets.
There are currently just three operational terminals in the U.S.
to export LNG: Dominion Energy Inc.'s Cove Point in Maryland and
Cheniere Energy Inc.'s two plants in Louisiana and Texas. There are
a handful of plants and expansion projects under construction,
which were approved by regulators several years ago, but analysts
say they aren't enough to meet rapidly growing demand.
There are about 25 proposed U.S. LNG export projects, 13 of
which could have regulatory approval within the next year. While
not all of the projects will be built, the world needs at least a
handful of them to satisfy demand. The U.S. could ultimately
account for 20% to 30% of global LNG supply, analysts say.
The unexpectedly strong growth of demand over the past year is
giving a boost to the U.S. export industry, which some had feared
would stall. U.S. exporters could add 57 million metric tons or
more of annual supply next year to the LNG market, nearly doubling
the amount available for export, according to analysts.
American LNG exporters are competing for customers with
suppliers in Canada, Qatar, Russia, Australia and elsewhere. But
the U.S. companies believe the country's vast natural-gas reserves,
some of the largest in the world, and relatively low prices will
make them competitive. A glut of natural gas has kept the U.S.
benchmark price for LNG near or below $4 per million British
thermal units for years. Asian LNG prices are more than double
that, while European prices have been higher than U.S. prices by
around 40% or more over the past few years.
Michael Sabel, co-chief executive of Venture Global LNG Inc.,
says his company will move forward with its estimated $4.5 billion
project in Louisiana near the Gulf of Mexico. The company hasn't
previously announced its final decision to build the plant.
"Customers are starting to think there will be a production
shortfall by 2021 or 2022, and that has ramped up contracting
activity," Mr. Sabel says.
The company's Calcasieu Pass facility will be able to supply
about 10 million metric tons a year of LNG, or about 1.3 billion
cubic feet a day, and will take around three years to build. The
company will make a formal announcement on the project in late
January after it receives final approval from the Federal Energy
Regulatory Commission, Mr. Sabel says.
The surge in global LNG demand is being driven by China's push
to cut carbon emissions, in part by shifting from coal-fired power
plants to natural gas. Net Chinese imports of LNG will jump from
five billion cubic feet a day in 2017 to nearly eight billion this
year, according to Citigroup Inc., which expects China's demand for
natural gas to grow an average of 13% a year through 2021. One
billion cubic feet is enough gas to fuel around five million U.S.
homes for a day.
Some had feared the 10% tariff China imposed on imports of LNG
from the U.S. earlier this year amid trade tensions with the Trump
administration could stall the U.S. export industry. But China's
faster-than-expected demand growth is tightening supplies
everywhere, meaning the world needs U.S. LNG to help fill the
void.
"Over the last 12 to 18 months the global market has really
tightened up, " says Kristy Kramer, a researcher at energy
consultants Wood Mackenzie. "We expect 2019 to be a record year
globally" for investment decisions on LNG terminals, she adds.
That shift may spur other major proposed projects in the U.S. to
move forward, say analysts, including Tellurian Inc.'s $27.5
billion Driftwood LNG project and the $10 billion Golden Pass LNG
Terminal, a joint venture of Qatar Petroleum, Exxon Mobil Corp. and
ConocoPhillips. The companies have said they could make a final
decision on the projects, both of which are on the Gulf of Mexico,
in 2019.
Mr. Matthews is a Wall Street Journal reporter in Houston. Email
christopher.matthews@wsj.com.
(END) Dow Jones Newswires
December 03, 2018 15:02 ET (20:02 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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