U.S. is the Largest LNG Exporter Topping Australia and Qatar

Resumption of shipments from the Freeport LNG terminal helped the U.S. grow LNG exports in 2023 (Freeport LNG file photo)

PUBLISHED SEP 12, 2023 5:26 PM BY THE MARITIME EXECUTIVE


The United States exported more LNG than any other country in the first half of 2023 according to a new report from the U.S. Energy Information Administration (EIA). The government agency that analyzes and reports on the energy markets to inform policy decisions cited the resumption of operations at the Freeport LNG facility as one of the key contributors to the growth in exports in 2023 while numerous additional LNG projects are in the development stage primarily for the U.S. Gulf Coast.

Using data from the French not-for-profit association CEDIGAZ, which is dedicated to natural gas information, the report says U.S. exports grew by four percent in the first half of this year compared to the same period in 2022. The United States exported more liquefied natural gas (LNG) than any other country averaging 11.6 billion cubic feet per day (Bcf/d). In addition, the report highlights that U.S. LNG exports set a monthly record of 12.4 Bcf/d in April as Freeport LNG ramped up LNG production.

Freeport LNG, the second-largest LNG export terminal in the U.S., went offline after a June 2022 explosion. The plant remained offline not completing its first shipments till February 2023 while there were undertaking repairs and upgrades to systems. Management said they would be ramping up operations at least into March 2023 while longer term they are planning to add a fourth train. According to Freeport LNG management, this expansion will allow for the export of an additional 5+ mtpa of LNG, increasing Freeport LNG’s total export capability to more than 20 mtpa of LNG per year.

The U.S. has traditionally been competing with Qatar for the title of the largest exporter, but Australia edged out Qatar this year for the second position according to the data from CEDIGAZ. Australia exported the world’s second-largest volume of LNG in the first half of 2023, averaging 10.6 Bcf/d, followed by Qatar at 10.4 Bcf/d.

Similar to the patterns established in 2022, the EIA cites the strong growth in demand from Europe as the primary market for U.S. gas exports. EU countries and the UK remained the main destinations for U.S. LNG exports in 1H23, accounting for 67 percent (7.7 Bcf/d) of total U.S. exports. Five countries, the Netherlands, the UK, France, Spain, and Germany, imported more than half (6.0 Bcf/d) of total U.S. LNG exports.

European countries have been rushing to develop new import capabilities to make up for the loss of Russian gas. Germany created import facilities chartering a series of FSRUs placed both in the east and western seaports. Finland also chartered a vessel and new facilities opened in Italy and Spain, with countries including Greece working to develop their import facilities using FSRUs. Operations are beginning exports in emerging areas including Egypt and other African countries.

After a mild winter, Europe and the UK ended the 2022–23 heating season with the most natural gas in storage on record, and the region continued importing LNG to rapidly refill its storage inventories in the spring and summer.

In the first six months of this year, Europe and the UK’s LNG imports exceeded imports by pipeline for the first time on record, according to data from Refinitiv Eikon.

Demand remains strong from the European markets and with LNG exports on the rise, a record number of gas carrier vessels are now on order. The backlog to build vessels in South Korea helped China to increase orders for new LNG carriers. Rumors from South Korea indicate the three big shipbuilders are on the verge of a massive order for vessels tied to Qatar’s ongoing expansion which includes the opening of the North Field. Qatar lifted a self-imposed expansion ban in 2021. According to the International Trade Administration, the first phase of Qatar’s North Field project is expected to increase capacity by 43 percent from 77 million tons per annum (mtpa) to 110 mtpa by 2025. The second phase, called the North Field South Project, will further increase the production capacity from 110 mtpa to 126 mtpa, a total 64 percent increase by 2027.

New Study Questions LNG as a "Bridge Fuel" in Decarbonization

By Haley Zaremba - Feb 10, 2024

• President Joe Biden announced a pause on new LNG export licenses to assess their impact on domestic energy security, consumer costs, and the environment.
• 
  
• Recent studies and scientific letters argue that LNG may not be as clean as previously thought, potentially being worse for the climate than coal when considering the full lifecycle of its production and methane emissions.
• 
  
• The pause on LNG exports is contentious, with some arguing it will hinder global energy demands and environmental progress, while others see it as a necessary step towards cleaner energy alternatives.

For years, the petroleum industry has been trying to push liquefied natural gas as a clean energy source, or at least a cleaner energy source than other fossil fuels, touting its role as a stepping stone or ‘bridge fuel’ between higher-emissions fuels and clean energy in the decarbonization transition. But recent research shows that LNG may not always be cleaner than coal, the dirtiest fossil fuel. 

The debate over whether LNG is in reality a cleaner alternative to other fossil fuels has been reengaged in recent months as the Biden administration has announced that it will pause approvals of new licenses to export liquefied natural gas. Last Friday, President Joe Biden announced that during this freeze the United States Department of Energy will review and assess whether the nation’s considerable LNG exports are “undermining domestic energy security, raising consumer costs and damaging the environment.”

This pause will have widespread implications for global energy markets, as the United States was the single biggest exporter of liquefied natural gas in the world in 2023. According to LSEG data, full year exports from the U.S. rose 14.7% to 88.9 million metric tons (MT), but from 77.5 million metric tons in 2022. 

As the Biden administration's decision to pause new approvals makes waves around global energy markets, it’s also caused a major resurgence of the natural gas debate in scientific circles. We now know that natural gas is much more harmful for the environment than initially thought, but there is widespread disagreement about to what extent, and whether pausing exports is actually the right move for the environment. 

In December 2023, 170 climate scientists signed onto a letter petitioning President Joe Biden to reject all plans to build more LNG export terminals going forward, and especially along the Gulf of Mexico. Their argument was based on the finding that, in stark contrast to the dominant energy transition narrative, liquefied gas is actually “at least 24 percent worse for the climate than coal.” This figure comes from a  forthcoming Cornell University study (which has not yet been peer reviewed). 

The issue is not really the consumption of the natural gas itself, but emissions associated with the life cycle of liquefied natural gas production. The Cornell University figure comes from figuring in the carbon dioxide emissions that result from the liquefying process, which requires chilling natural gas to extremely cold temperatures, an energy-intensive ordeal. 

Another major issue is the methane that is released during the extraction of natural gas. Methane is an extremely potent greenhouse gas. While it breaks up much more quickly in the atmosphere than carbon dioxide, it is 80 times more potent at warming than CO2 over a 20-year period. And peer–reviewed studies (like this one, this one, and this one) are increasingly indicating that natural gas produces much, much more methane over its life cycle than previously thought. 

But other experts contend that these figures, while peer-reviewed, are politically motivated and the figures are inflated or skewed to tell a certain narrative that’s not necessarily consistent with reality. “It's just extremely frustrating to even deal with claims like this, because we talk about settled science,” says Dan Byers, vice president of policy at the U.S. Chamber of Commerce, where he works on environmental issues in a recent Scientific American report. “The notion that, you know, LNG and natural gas reduce emissions by displacing coal is completely well established. So it feels like we’ve got like a flat earth situation going on with these claims.”

A recent op-ed in the Wall Street Journal goes as far as to contend that the Biden administration’s new LNG export pause will actually harm the environment more than it helps. In the op-ed Chris Barnard, president of the American Conservation Coalition, argues that if the United States takes a step back from meeting global energy demands, other energy powers including Russia and China will only be too happy to fill those shoes. He argues that the result will be a more volatile geopolitical landscape as well as an increase of more carbon-intensive energy sources on the market. 

As usual, the truth probably lies somewhere in the middle. But the one thing that’s certain is that regardless of whether coal or LNG is cleaner, clean energy buildout will always be the cleanest. Of course, LNG will continue to have a role in stabilizing, and yes, bridging a smooth energy transition. But the quicker we can move away from it, the better. 

By Haley Zaremba for Oilprice.com

LNG Projects Poised for Bumper Season Despite Washington Freeze

By Alex Kimani - Feb 07, 2024

• Energy Intelligence: interest in long-term LNG projects remains robust.
• 
  
• Energy Intelligence: we expect the LNG momentum to continue under the next government regardless of who wins the November presidential elections due to Biden’s commitment to U.S. allies and Trump’s pursuit of higher fossil fuel production.
• 
  
• WoodMackenzie: expect lower LNG prices in 2024.

Last week, U.S. President Joe Biden paused new licenses for LNG export projects still in the planning pipeline to give his administration time to reassess whether additional infrastructure is in the “public interest” in terms of the country’s energy security and climate goals. 

The administration has highlighted lingering fears that shipping large volumes of U.S. gas overseas could erode America’s competitive advantage of cheap energy critical for energy-intensive industries such as steelmaking and petrochemicals and also seeks to address concerns by environmental activists who have argued that the entire LNG manufacturing, delivery and consumption cycle has a much higher carbon footprint than currently touted. 

Not surprisingly, the decision has irked Republican lawmakers and rattled U.S. allies, especially in Europe due to the continent’s heavy reliance on American gas. With exports averaging 11.6 billion cubic feet per day (Bcf/d) during the first half of 2023, the U.S.  is the world’s largest LNG exporter, ~70% of exports going to Europe and much of the balance going to Asia. 

Currently, the U.S. has seven operating terminals capable of producing as much as 87 million tonnes of LNG a year--enough to satisfy the needs of Germany and France. Five more projects--already approved and under construction--will add another 63 million tonnes of capacity by 2028.

Scores of Big Oil companies including Exxon Mobil Corp. (NYSE:XOM), Chevron Corp. (NYSE:CVX), ConocoPhillips (NYSE:COP) and Energy Transfer LP (NYSE:ET) will potentially be impacted by the LNG freeze after they signed long-term supply deals with Venture Global LNG due to the company’s Calcasieu Pass 2 plant project. The project is part of a proposed 20 mtpa expansion of Venture Global’s existing Louisiana facility. 

But here’s the good news for gas bulls: Whereas proposed LNG projects waiting for permits will probably now have to wait until 2025 due to the November elections, Energy Intelligence has reported that interest in long-term LNG projects remains robust. Earlier, energy Intel had provided estimates that around 69 million tons per year of LNG would reach Final Investment Decision (FID) in the current year, potentially the most significant year for FIDs since 2019, when more than 70 million tons/yr was sanctioned. 

The energy agency says momentum remains strong following more than 40 million tons/yr in foundation supply agreements over the last two years, supporting projects that include Commonwealth, CP2 in North America, Delfin and Saguaro. The new approvals stand to increase capacity under construction by 40% and extend the next supply wave to 2028-29. 

Obviously, the LNG freeze means it’s highly unlikely that Energy Intel’s forecast will be met in the current year. However, we expect the LNG momentum to continue under the next government regardless of who wins the November presidential elections due to Biden’s commitment to U.S. allies and Trump’s pursuit of higher fossil fuel production with the former president vowing to restart approvals on his “very first day back”. 

“The decision will not affect our forecast for U.S. LNG exports out to 2028, but after that it could affect the trajectory and pace of the sector’s growth and have potential to tighten the market in the long run,” Giles Farrer, head of gas and LNG asset research at Wood Mackenzie, has told the Financial Times.

That said, the LNG hiatus could complicate matters if it carries on for too long. LNG buyers would be forced to look elsewhere while buyers would struggle to get financing to reach the critical final investment decisions without buyers if the government drags its feet.

Source: Energy Intel

Source: Y-Charts

Gas Prices Lag

Back in 2022, Europe’s key front-month Dutch Title Transfer Facility (TTF) rocketed to an all-time high of €340 per megawatt-hour while U.S. Henry Hub gas prices hit a 15-year high of $9.24 per MMBtu around the same time European gas peaked as the continent scrambled for new gas supplies after it ditched Russian gas. Unfortunately, booming production coupled with mild weather has badly tanked gas prices, with TFF prices falling to below €30 per megawatt-hour, the lowest level since August 4th, while Henry Hub gas has now sunk to $2.02/MMBtu. 

Wall Street is predicting more pain in natural gas and LNG markets in the current year: in its report dubbed ‘Global Gas and LNG: 5 things to look out for in 2024’, Wood Mackenzie has forecast that mild Northern Hemisphere winter coupled with high storage levels in Europe will keep global gas prices subdued in 2024.

“[Wood Mackenzie] has been forecasting lower 2024 prices for much of last year, especially compared to forward curves, amid weak market fundamental expectations. Global LNG supply growth will remain limited at 14 million, but with Asian LNG demand still weak, competition for LNG is unlikely to heat up,” Massimo Di Odoardo, Vice President of Gas Research at Wood Mackenzie, has said.

By Alex Kimani for Oilprice.com

BC

$10 billion Nisga'a-led LNG project gets green light to enter environmental review

Eva Clayton, president of the Nisga’a Nation, said the sooner the hydro power grid can be upgraded to help electrify LNG projects the better

Author of the article:Gordon Hoekstra
Published Mar 19, 2023 • 

Eva Clayton, president of the Nisga’a Nation. 

PHOTO BY SEAN KILPATRICK /The Canadian Press


The Nisga’a-led $10-billion Ksi Lisims LNG project has been given the greenlight to enter the province’s environmental review process.

The decision on the export facility in northwest B.C. was announced by the B.C. Environmental Assessment Office last week, just days after the B.C. government gave final approval to the $2.4-billion Haisla Nation’s Cedar LNG project.

The Nisga’a’s project partners include a consortium of Canadian gas producers, Rockies LNG, and Houston, Tex.-based Western LNG.

The decision on Ksi Lisims kicks off a process that will set out how the review will take place, including the federal government’s role, and what will go into a final application and decision. The assessment process could take up to 18 months or more.

The recent LNG announcements highlight the increasing Indigenous involvement in major resource projects in B.C., and the benefits that can flow from the projects to First Nations.

But the prospect of more liquefied natural gas projects — which tap into B.C.’s vast northeast natural gas reserves for export to overseas markets — also raises significant questions on how the B.C. government will reach its legislated greenhouse gas emission targets.

Both projects tout themselves as achieving “net-zero” emissions, in part, by tapping into the B.C. Hydro’s power grid, but critics, which include First Nations, note the project will also increase emissions with increased natural gas extraction in northeast B.C.

Eva Clayton, president of the Nisga’a Nation, said the sooner the hydro power grid can be upgraded to help electrify LNG projects the better.

Without electricity, LNG plants, which liquefy gas for transport on ships, use the gas itself to power the equipment and significantly increases GHG emissions.

“I am pleased to see Premier (David) Eby’s remarks about the new LNG framework recognizing what we have long known: that economic reconciliation and net-zero LNG development go hand in hand,” Clayton said in a written statement.

Following approval of Cedar LNG last week, Eby announced a new strategy that will put a cap on all emissions from the oil and gas sector including from LNG production. It is meant to ensure B.C. meets its 2030 emissions reduction target for the sector.

He rejected the premise that responding to the climate crisis means always saying no to projects.

B.C. has targeted reducing GHG emissions by 40 per cent by the end of the decade over levels in 2007. However, emissions have been reduced just one per cent.

Ksi Lisims LNG estimates that if its facility is electrified annual GHG production would be under 200,000 tonnes a year, 0.3 per cent of B.C.’s annual emissions.

Without electrification, or if construction of the needed 95-kilometre power line is delayed, emissions would be up to 1.9 million tonnes a year, or nearly three per cent of annual emissions.

Those emissions would be in addition to millions of tonnes from the Cedar LNG project and the much larger LNG Canada, which is expected to be in operation in 2024.

While some First Nations in northwest B.C. have been supportive of the Ksi Lisims project, the Lax Kw’alaams has called for the environmental assessment application to be terminated.

“The project would induce the breach of B.C.’s legislated climate targets and would cause extraordinarily adverse effects to Lax Kw’alaams rights as proposed,” the First Nation said in a letter to the assessment office this month.

Environmental groups have long cited concerns that LNG projects will prevent B.C. from hitting its climate targets.

Wilderness Committee climate campaigner Peter McCartney said it’s impossible to keep approving new climate pollution and meet GHG emission reduction targets.

“The province has very clear commitments to reduce its greenhouse gas emissions, which these facilities are going to make it much harder to do, whether they’re led by First Nations or not,” observed McCartney.

ghoekstra@postmedia.com

B.C. sets high emissions bar for new LNG projects

March 17, 2023Reuters

British Columbia’s decision this week to toughen emissions standards for new liquefied natural gas (LNG) projects creates one of the most robust climate plans in North America, but sets a high hurdle for the industry even as many countries look to Canada to become a global supplier of gas.

As part of a new energy action framework, the western Canadian province will require proposed LNG projects that are going through or entering the environmental assessment process to have a credible plan to be net-zero emissions by 2030.

While the tougher regulation will not impact the huge Shell-led LNG Canada project already under construction, a proposed export terminal adjoining the small-scale Tilbury LNG facility and the early-stage Ksi Lisims LNG project in northern B.C. will fall under the new rule.

Canada is the world’s sixth-largest gas producer and its west coast LNG industry has seen revived interest as the world tries to secure alternatives to Russian gas supply following the invasion of Ukraine.

The province will start exporting 14 million tonnes per annum (MTPA) when LNG Canada enters service in 2025.

“That (net-zero requirement) is a very high bar and a high hurdle to pass,” said Mark Zacharias, executive director of think-tank Clean Energy Canada, adding the new framework rounds out B.C.’s plan to cut emissions 40% below 2005 levels by 2030.

“The B.C. roadmap to 2030 is probably North America’s strongest climate plan but what was missing until now was answers on dealing with oil and gas. This fills in the missing gaps.”

Ksi Lisims, proposed as a 12-MTPA plant, will achieve net zero through a fully electrified facility that utilizes renewable hydropower and carbon offsetting, spokesperson Rebecca Scott said.

FortisBC, one of the companies behind the Tilbury Marine Jetty project, said it welcomed the clarity the framework provides for LNG development and “looked forward to engaging with the government” on the 2030 guidelines.

B.C. released its energy action framework alongside a positive environmental assessment for the C$3-billion ($2.2 billion) Cedar LNG project, a joint venture between Haisla First Nation and Pembina Pipeline Corp.

The province said it will sign an agreement with the Haisla Nation to explore ways to lower emissions to near zero by 2030.

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OIL AND GAS CAP

B.C.’s new regulations also include an oil and gas emissions cap and plans to accelerate the electrification of the economy.

Tristan Goodman, CEO of the Explorers and Producers Association of Canada, said the framework is generally “constructive and positive”, but the industry had some concerns about how the cap would be implemented.

“The message from the province is ‘We believe we can develop natural gas and move forward broadly on Indigenous reconciliation while also meeting out climate ambitions’,” Goodman said. “That’s good, but the concern lies in the details.”

TC Energy, which is building the Coastal GasLink pipeline that will supply LNG Canada and Cedar LNG, said in a statement on Wednesday it was “carefully reviewing” the framework.

Cedar LNG Receives B.C. Environmental Approval and Signs Memorandum of Understanding with ARC Resources Ltd.

'This Is Terrifying': Explosion at Texas Gas Plant Spotlights Threat of LNG Industry

"We shouldn't have to live in fear just so gas executives like Michael Smith can get rich," said one local resident, referring to Freeport LNG's CEO.


Surveillance footage captures the explosion at the Freeport LNG plant on Quintana Island in Texas on June 8, 2022. (Photo: Quintana Beach County Park/Facebook)

JAKE JOHNSON

June 9, 2022

An explosion at a major liquefied natural gas plant in Texas on Wednesday heightened fears of pollution and other impacts in nearby communities—and served as the latest example of the threat the booming LNG industry poses to the climate.

"Freeport LNG really doesn't care about us. This is not the first fire."

The blast at Freeport LNG's export terminal on Texas' Quintana Island was reported around noon local time, and no injuries have been disclosed. Authorities said the fire and "release" from the explosion were swiftly contained and that an investigation into the cause is underway, but local residents voiced concern that they're going to be kept in the dark.

"This is terrifying," said Melanie Oldham, founder of Citizens for Clean Air and Clean Water in Brazoria County, where the Freeport LNG facility is located. "We've been afraid of a disaster happening ever since Freeport LNG started exporting gas. We shouldn't have to live in fear just so gas executives like [company CEO] Michael Smith can get rich."

"This is dangerous business," Oldham added. "What kind of air monitoring are they doing out there? Will they even be able to tell what the explosion released? And will they tell us? Thankfully it looks like none of the workers or anyone else was injured or killed. We may not be so lucky the next time there's an explosion at this plant, or any of the polluting facilities surrounding us, for that matter."

Surveillance video footage posted to Facebook by Quintana Beach County Park appears to show the first moments of the explosion, which reportedly shook nearby buildings.

"I saw it blow up from my job site—biggest fireball I've ever seen," said one Freeport resident.

The facility, one of the largest LNG export plants in the United States, is expected to shut down for at least three weeks in the wake of the explosion and fire, injecting further chaos into global energy markets already roiled by Russia's war on Ukraine.

One industry analyst told Reuters that the temporary shutdown will likely take 1 million tonnes of LNG off the market.

But Harold Doty, who lives on Quintana Island, warned that "there is still no emergency action plan for that plant" despite Wednesday's explosion.

"Originally, the plant said that people on the island should go to the beach and have the Coast Guard pick them up in boats," said Doty. "Freeport LNG really doesn't care about us. This is not the first fire. There are often fire alarms at the plant that I can hear from my house. I can never get any explanation when I call, so I've quit calling."

The explosion came as U.S. LNG exports to Europe are surging as part of the Biden administration's plan to help E.U. nations wean themselves off Russian fossil fuels. According to federal data released this week, U.S. LNG exports averaged 11.5 billion cubic feet per day during the first four months of this year, an 18% jump compared to the 2021 annual average.

While the fossil fuel industry often characterizes LNG as a more climate-friendly alternative to coal and other dirty energy sources that are driving global warming, environmentalists stress that LNG is a major emitter of methane—a greenhouse gas roughly 80 times more potent than carbon dioxide.

"In the United States, natural gas accounts for more than one-third of carbon emissions and almost half of methane emissions," notes Marisa Guerrero of the Natural Resources Defense Council.

In a statement Wednesday, Citizens for Clean Air and Clean Water in Brazoria County and the Texas Campaign for the Environment said that "the oil and gas industry has been benefiting from an 'export boom' that is sending gas and crude oil overseas in record amounts, but has resulted in leaks, explosions, and wrecked communities back home—from flaring and pollution in the Permian Basin to explosions like the one today on Quintana Island."

"Officials rarely disclose the contents of the tanks that explode, leaving local residents to just have to wonder whether or not they are in danger," the groups continued. "The boom is also jeopardizing global climate agreements, as the window to rein in emissions is closing."

Freeport LNG Fire Cuts Key Source Of U.S. Gas Supply To Europe, Asia

By Marwa Rashad
06/09/22 

Model of LNG tanker is seen in front of the EU flag in this illustration taken May 19, 2022. 

 Photo: Reuters / DADO RUVIC

By Marwa Rashad

LONDON (Reuters - An at least three-week shutdown at Freeport LNG, operator of one of the largest U.S. export plants producing liquefied natural gas (LNG), is expected to delay cargoes to Europe, further stressing the continent's drive to phase out Russian gas.

The outage at the plant, which provides around 20% of U.S. LNG processing capacity, began with an explosion at its Texas Gulf Coast facility on Wednesday. It has triggered alarm bells among players in market already struggling with reduced Russian supplies and resurgent demand in Asia.

The plant historically sent most of its cargoes to Japan and Korea, but the outage will affect Europe, which has been pulling U.S. cargoes from the east because of the higher prices. Russia's invasion of Ukraine - actions that Moscow calls a "special military operation" - shifted flows to Europe from Asia.


A three-week shutdown will mean the loss of around 13-15 cargoes, although Europe should be able to make up its losses from gas storage. But the risk remains if the shutdown extends for a longer period, said analysts.

"An outage for three weeks minimum is a loss of around 940,000 tonnes of LNG. If you took an average cargo size around 70,000 tonnes, that's about 13 cargoes," said Alex Froley, LNG analyst at data intelligence firm ICIS.

The outage coincides with Nord Stream 1 maintenance and some Norwegian gas maintenance measures; however the market might be able to deal with it by withdrawing some volumes from storage potentially, said a person familiar with the market.

"If the outage lasts months rather than weeks, the total loss can be much greater, and Europe's more comfortable inventory situation will not be quite as reassuring. We would then expect the strong European LNG price premium over Asia to return," said Tamir Druz, managing director at Capra Energy.

The news has initially sent U.S. natural gas futures down as much as 14% as traders anticipated the outage would free up supplies and help rebuild U.S. storage for winter demand.

However, prices recovered later on Thursday and were up about 2% as the market focused more on high air conditioning demand from a heatwave blanketing parts of the United States, especially Texas. [NGA/]

In Europe, gas prices rose by up to a fifth on Thursday morning on fears lost U.S. shipments would stress a market already struggling with reduced Russian supplies. Prices cooled off at the market close. [NG/EU]

Japan-Korea-Marker (JKM) prices - which are widely used as a benchmark for Asian LNG - also rose, with The Platts JKM LNG assessed at $23.486 per metric million British thermal units (mmBtu) on Thursday, an increase of $1.694, or 7.8%, from the previous day.

FREEPORT'S BUYERS

BP, TotalEnergies, Osaka Gas, Japan's biggest power generator JERA and South Korea's SK Gas Trading are listed as the buyers of Freeport LNG cargoes, industry sources said. BP has the largest contract at 4.4 million tonnes per annum through 2040.

Japan typically imports 6-7% of its total LNG supply from the United States during June, with LNG from Freeport accounting for at least half of the volume, said Kpler gas and LNG analyst Ryhana Rasidi.

South Korea has imported an average of about 20% of its LNG from the United States in June over the last two years. It could potentially lose at least 0.13 million tonnes of LNG, about 17% of its consumption, from the facility, she said.

In March, 21 cargoes loaded at the Freeport facility, carrying an estimated 64 billion cubic feet of gas to destinations in Europe, South Korea and China, according to the U.S. Department of Energy. That was up from 15 cargoes in February and 19 in January.

Around 70% of Freeport's monthly supplies in the past few months went to the European Union and Britain. France, Britain, Turkey and the Netherlands have been the biggest European importers from Freeport LNG this year, industry sources said.

"Of 14 Freeport cargoes arriving at destinations in May, 10 of them went to Europe, two to Asia and two to the Americas." Froley said. (Graphic: Freeport exports by destination -

US now world’s top LNG exporter, as Europe boycotts cheaper Russian gas

The USA has rapidly become the world’s biggest exporter of liquefied natural gas (LNG), tied with Qatar. Europe replaced Asia as the top market for US LNG in 2022, boycotting cheaper Russian energy over the proxy war in Ukraine.

By  Ben Norton




The United States has rapidly become the world’s biggest exporter of liquefied natural gas (LNG), tied with Qatar.

A significant reason for this meteoric increase is because Europe replaced Asia as the top market for US LNG in 2022, as Brussels pledged to boycott Russian energy over the proxy war in Ukraine.

Among the principal importers of US LNG are France, Spain, Britain, the Netherlands, and Italy.

Europe is now paying significantly more for expensive US LNG than it had previously for Russian pipeline gas.

As of 2022, Europe had the highest energy prices on the planet. This was a key factor in fueling an inflation crisis that spread worldwide, and hit Europe especially hard.

Bloomberg reported that the “US tied Qatar as the world’s top exporter of liquefied natural gas” in 2022, calling it “a milestone for the meteoric rise of America as a major supplier of the fuel.”

The outlet added that the United States, “which only began exporting LNG from the lower-48 states in 2016 and has seemingly overnight become a dominant force in the industry.”

A graph from the Energy Information Administration (EIA) illustrates the monumental shift in US LNG exports in just six years.



S&P Global reported in September 2022 that European imports of LNG made up the “lion’s share” of US exports in the first six months of 2022.

Global imports of US LNG nearly doubled from $10.8 billion in the first half of 2021 to $21.2 billion in same period in 2022.

“Many U.S. LNG export cargoes departed for Europe in the first half of 2022 as the war in Ukraine prompted a scramble for LNG supplies,” S&P Global wrote, adding that “LNG market experts have warned that shipments of LNG cannot quickly replace curtailed pipeline imports from Russia and that the region’s need for significant LNG volumes will remain strong.”

The market intelligence unit stressed that Europe has the highest gas prices on Earth. Its benchmark energy price hit a historic high of roughly €320 per megawatt hour in August.

S&P Global followed up with another report in November, stating that the “European energy crisis has put US natural gas in high demand and in a position of acute geopolitical relevance.”

The financial information firm used the same language, that the “lion’s share headed to Europe following Russia’s invasion of Ukraine in February” and the escalation of the NATO-Russia proxy war.

The industry monitor LNGPrime reported that France, Spain, the Netherlands, Japan, and Italy bought nearly half (46.4%) of total US LNG exports in May 2022.

Reuters noted in December 2022 that US LNG prices had approximately doubled in the previous year. It added that US LNG exports to Europe increased by a staggering 137% in the first 11 months of 2022, compared to 2021.

The news wire added that “the United States will remain the primary supplier of LNG to Europe for at least 2023. This will likely generate even greater revenue for U.S exporters after a record 2022, which totaled $35 billion through September, compared to $8.3 billion over the same period in 2021.”

This massive spike in energy prices is causing economic chaos in Europe. Politico published an article in November 2022 titled “Why cheap US gas costs a fortune in Europe.”

It pointed out that US LNG is almost four times more expensive in Europe. And it is not just North American corporations that are profiting from this substantial markup, but also European importers and resellers.

Even France’s right-wing President Emmanuel Macron, a former investment banker, complained to French industrial executes, “In today’s geopolitical context, among countries that support Ukraine there are two categories being created in the gas market: those who are paying dearly and those who are selling at very high prices… The United States is a producer of cheap gas that they are selling us at a high price… I don’t think that’s friendly.”

Politico added, “Macron’s dig conveniently ignored that the largest European holder of long-term U.S. gas contracts is none other than France’s own TotalEnergies.”

In 2018, the CEO of Austrian fossil fuel company OMV estimated that Russian pipeline gas was 50% cheaper than US LNG. The corporate executive, Rainer Seele, said, “I think it is about 50% difference between LNG and Russian gas.”

Freeport LNG Restart And $2 Natural Gas Put This LNG Giant's Earnings Beat In Focus

KIT NORTON
02/23/2023

Cheniere Energy (LNG), the largest U.S. exporter of LNG, topped fourth-quarter financial estimates early Thursday. The report lands as a volatile natural gas market has gas prices at their lowest levels since 2020, and as Freeport LNG, a key U.S. liquefied natural gas export facility, prepared to end an eight-month pause in exports. Cheniere Energy stock surged Thursday.

Cheniere Energy reported $9.08 billion in Q4 revenue, up 38% from last year, with EPS of $15.78. Ahead of earnings, analysts forecast EPS of $6.02, up from a loss of $5.22 a year ago.

Cheniere's Revenue Doubles

This was the second consecutive quarter Wall Street predicted booming profits for Cheniere Energy. In Q3, LNG reported a net loss of $9.54, sharply below analysts expectations for a profit of $5.58 per share. Analysts expected Cheniere Energy Q4 revenue to increase 22% to $8.03 billion.

The Houston-based company is the largest producer of liquefied natural gas in the U.S. and one of the largest LNG operators in the world. Its services range from gas procurement and transport to vessel chartering and delivery. Cheniere owns and operates liquefied natural gas terminals near Corpus Christi, Texas.

For the full year, Cheniere earned $5.64 per share, up from a loss of $9.25 in 2021.

 Meanwhile, Cheniere revenue more than doubled to $33.43 billion in 2022.

Cheniere Energy stock soared 9.1% t0 161.31 Thursday during market trade. On Wednesday, LNG shares edged up 2.7% to 147.77. The stock is now trading more than 19% above an early January low, in a consolidation begun in November.

LNG shares rank 36th in IBD's Oil & Gas-Transport/Pipeline industry group. The group ranks No. 38 among the 197 industry groups tracked by IBD. Cheniere Energy stock has a 39 Composite Rating out of 99. The stock also has a 51 Relative Strength Rating. The EPS Rating is 24 out of 99.

Natural Gas Below $2

Natural gas futures prices rose modestly Thursday, after sliding on Wednesday below the $2 per million British thermal units. That was the first undercut of the $2 mark since September 2020. Natural gas prices have declined more than 45% since the beginning of 2023 and are down around 80% from their August, 2022 peak of $10.

The latest Energy Information Administration data also shows U.S. natural gas stockpiles are at 2.266 billion cubic feet. This is up 17% compared to last year and nearly 9% above the five-year average. Meanwhile, the amount of natural gas flowing to U.S. LNG export plants rose to a 10-month high last week, according to the EIA.
Freeport LNG Is Back

U.S. gas supplies started to back up after an explosion and fire shut down Freeport LNG's Quintana, Texas export facility on June 8. The loss of export capacity led to a gas price peak in August, after which prices veered into a steep slide.

On Tuesday, the privately held Freeport said regulators approved the restart of commercial operations.

The Federal Energy Regulatory Commission gave Freeport LNG permission to restart two of three liquefaction trains, which compress natural gas into condensed, super-chilled liquid. Freeport LNG expects to increase production to 2 billion cubic feet per day (bcf/d) — about 15% of total U.S. LNG export capacity — over the "next several weeks."

However, the facility's third liquefaction train still requires regulatory authorization before it can be brought back online. The first LNG production and ship loading from the facility began on Feb. 11, Freeport LNG reported Tuesday.

"Returning to liquefaction operations is a significant achievement for Freeport LNG," CEO Michael Smith said in a statement.

The unexpected shutdown of the facility reduced U.S. LNG exports, and caused a sudden loss of demand for natural gas. That, in turn, left surplus gas on the U.S. market, allowing U.S. utilities to inject higher-than-expected reserves into stockpiles for the winter.

Freeport repeatedly pushed back its timeline to resume operations. The impact of the facility's restart on natural gas markets, demand and prices is not clear.

U.S. Poised To Become Top Exporter

The U.S. is set to become the largest LNG exporter in 2023, according to a new report from U.K.-based Wood Mackenzie. In 2022, the U.S. was the third-largest exporter of LNG with 76.4 million metric tons per annum. The resumption of Freeport LNG's facility positions the U.S. to export 89 million metric tons this year, surpassing Qatar and Australia, according to Wood Mackenzie.

Based on the combination of projects already under construction and momentum of potential projects, U.S. LNG capacity could grow between 70 million metric tons per annum-190 million metric tons per annum before the end of the decade.

LNG Carrier Shipbuilding Risks Stranded Assets Due to Climate Policies

Risk for stranded assets is high due to the rate of LNG carrier construction and climate change policies (file photo)

PUBLISHED MAY 25, 2023 4:46 PM BY THE MARITIME EXECUTIVE

 

The rapid growth in LNG shipbuilding responding to the demand for gas transport is raising the likelihood of creating stranded assets writes Climate Analytics, a climate science and policy institute, in a newly released report entitled “High and Dry: The global energy transition's looming impact on the LNG and oil shipbuilding industry.” Partnering with South Korean climate and energy advocacy group Solutions for Our Climate, the report highlights the risk of overshooting LNG shipping capacity which is increased by future energy scenarios that call for the rapid elimination of fossil fuels.

“This report finds that the uptake in shipping capacity far exceeds global forecasts for the LNG trade as the world transitions away from fossil fuels,” writes Victor Maxwell and Nandini Das as co-authors of the report. The report calls for Korea and other shipbuilding countries to redirect public finance currently subsidizing fossil fuels, including shipbuilding activities, toward clean energy. Doing so they write would avoid stranded asset risk and delivery a transition for the shipbuilding industry away from its focus on gas carriers and crude oil tankers.

The orderbook for LNG carriers grew to record levels in 2022, with the authors citing the oil and gas industry’s “dash for LNG following Russia’s invasion of Ukraine.” While the war and the embargoes on Russian energy shifted demand to make up for the lost supplies, producing nations have also been rushing to increase capacity and LNG exports. Producers are expanding their facilities in the United States as nations such as China rapidly increase imports while Qatar is in the final phase of a long-term expansion project to open its new North Field which is expected to double the country’s exports.

The report analyzes the outlook for LNG carrier and oil tanker shipbuilding using a variety of scenarios in the efforts to slow global warming. They point out that these ship types in the five years between 2016 and 2020 accounted for 27 percent and 10 percent of shipbuilding globally. 

They calculate that at the end of 2021, there were around 700 LNG ships. However, they highlight the rapid growth in 2022 saying that 34 LNG carriers were added last year and a further 335 LNG carriers are expected to deliver between 2023 and 2028, according to data from Clarkson Research.

They further highlight that the South Korean shipbuilding industry is heavily dependent on LNG carriers. Along with tankers they said these ships rank among South Korea’s top ten exports in terms of value. In 2022, Korean shipbuilders won over 70 percent of the orders for LNG carriers, representing 65 percent of the tonnage order from the country’s shipbuilders. The market for VLCCs has been slower based on the downturn in the oil markets but rebounded since mid-2022 as analysts predicted the beginning of a prolonged upcycle in the oil market.

The report highlights that shipowners are also continuing to explore further LNG carrier orders. They cite reports that QatarEnergy is in discussions with the South Korean shipbuilders for a further order of up to 40 LNG carriers for delivery by 2027. TotalEnergies is also reported in discussion for an order of 17 LNG carriers to support its resumption of the Mozambique LNG project.

“If built, the global LNG shipping capacity will further exceed IEA’s forecast of LNG trade,” the report warns. “This poses a particular risk for financial institutions that provide loans and underwriting to the capital-intensive shipbuilding industry.”

They conclude that any decline in the market for these ships will have a significant impact on the sector and broader implications for shipbuilding nations. Given the traditional economic lifespan for ships versus the timelines for cutting and eliminating fossil fuel use, the report highlights the potential for creating stranded assets among the current class of newbuilds. They call for shipbuilders and their nations to prepare for these changes highlighting the heavy dependence on oil tanker and gas carrier construction creates a likelihood for a fundamental crisis.

 

LNG Carrier Shipbuilding Risks Stranded Assets Due to Climate Policies

Risk for stranded assets is high due to the rate of LNG carrier construction and climate change policies (file photo)

PUBLISHED MAY 25, 2023 4:46 PM BY THE MARITIME EXECUTIVE

 

The rapid growth in LNG shipbuilding responding to the demand for gas transport is raising the likelihood of creating stranded assets writes Climate Analytics, a climate science and policy institute, in a newly released report entitled “High and Dry: The global energy transition's looming impact on the LNG and oil shipbuilding industry.” Partnering with South Korean climate and energy advocacy group Solutions for Our Climate, the report highlights the risk of overshooting LNG shipping capacity which is increased by future energy scenarios that call for the rapid elimination of fossil fuels.

“This report finds that the uptake in shipping capacity far exceeds global forecasts for the LNG trade as the world transitions away from fossil fuels,” writes Victor Maxwell and Nandini Das as co-authors of the report. The report calls for Korea and other shipbuilding countries to redirect public finance currently subsidizing fossil fuels, including shipbuilding activities, toward clean energy. Doing so they write would avoid stranded asset risk and delivery a transition for the shipbuilding industry away from its focus on gas carriers and crude oil tankers.

The orderbook for LNG carriers grew to record levels in 2022, with the authors citing the oil and gas industry’s “dash for LNG following Russia’s invasion of Ukraine.” While the war and the embargoes on Russian energy shifted demand to make up for the lost supplies, producing nations have also been rushing to increase capacity and LNG exports. Producers are expanding their facilities in the United States as nations such as China rapidly increase imports while Qatar is in the final phase of a long-term expansion project to open its new North Field which is expected to double the country’s exports.

The report analyzes the outlook for LNG carrier and oil tanker shipbuilding using a variety of scenarios in the efforts to slow global warming. They point out that these ship types in the five years between 2016 and 2020 accounted for 27 percent and 10 percent of shipbuilding globally. 

They calculate that at the end of 2021, there were around 700 LNG ships. However, they highlight the rapid growth in 2022 saying that 34 LNG carriers were added last year and a further 335 LNG carriers are expected to deliver between 2023 and 2028, according to data from Clarkson Research.

They further highlight that the South Korean shipbuilding industry is heavily dependent on LNG carriers. Along with tankers they said these ships rank among South Korea’s top ten exports in terms of value. In 2022, Korean shipbuilders won over 70 percent of the orders for LNG carriers, representing 65 percent of the tonnage order from the country’s shipbuilders. The market for VLCCs has been slower based on the downturn in the oil markets but rebounded since mid-2022 as analysts predicted the beginning of a prolonged upcycle in the oil market.

The report highlights that shipowners are also continuing to explore further LNG carrier orders. They cite reports that QatarEnergy is in discussions with the South Korean shipbuilders for a further order of up to 40 LNG carriers for delivery by 2027. TotalEnergies is also reported in discussion for an order of 17 LNG carriers to support its resumption of the Mozambique LNG project.

“If built, the global LNG shipping capacity will further exceed IEA’s forecast of LNG trade,” the report warns. “This poses a particular risk for financial institutions that provide loans and underwriting to the capital-intensive shipbuilding industry.”

They conclude that any decline in the market for these ships will have a significant impact on the sector and broader implications for shipbuilding nations. Given the traditional economic lifespan for ships versus the timelines for cutting and eliminating fossil fuel use, the report highlights the potential for creating stranded assets among the current class of newbuilds. They call for shipbuilders and their nations to prepare for these changes highlighting the heavy dependence on oil tanker and gas carrier construction creates a likelihood for a fundamental crisis.

The Four Key Reasons Why The U.S. Will Never Stop Targeting Russia’s LNG Sector

• 
  
• By Simon Watkins - Apr 29, 2024
• 
  
• LNG has become the most important swing energy source in an increasingly insecure world.
• 
  
• Energy exports remain the foundation stone of Russia’s essentially petro-economy.
• 
  
• Russia's LNG industry is closely associated in Russia with President Vladimir Putin personally.

Perhaps even more than its targeting of Russian oil exports, the U.S. has been laser-focused on its liquefied natural gas (LNG) sector as they key area it wants to effectively destroy over the long term. Last week’s suspension of Russia’s flagship Arctic LNG-2 project by lead operator Novatek is the latest of Washington’s trophies in this regard, but it is very unlikely to be the last. As U.S. Assistant Secretary of State for Energy Resources Geoffrey Pyatt said on 24 April: “[Novatek] has recently had to suspend production at its Arctic LNG-2 liquefaction facility, in part because of sanctions that the Biden administration has led.” He added: “We’re going to keep tightening the screws […]  We’re going to continue to designate a broad range of entities involved in development of other key energy projects, future energy projects as well, and associated infrastructure including the Vostok Oil Project, the Ust Luga LNG Terminal, and the Yakutia Gas Project.” So, why is the U.S. so concerned about Russia’s LNG sector?

The first of four key reasons is that LNG has become the most important swing energy source in an increasingly insecure world. Unlike oil or gas that is transported through pipelines, LNG does not require years and vast expenses to build out a complex infrastructure before it is ready to transport anywhere. Once gas has been converted to LNG, it can be shipped and moved anywhere within a matter of days and bought reliably either through short- or long-term contracts or immediately in the spot market. Around a year before the Kremlin ordered the first Russian troops into Ukraine on February 24, 2022, China foresaw the critical significance of global energy dependency, as extensively discussed in my new book on the evolving dynamics of the global oil market. So, beginning in March 2021, a 10-year purchase and sales agreement was signed by the China Petroleum & Chemical Corp (Sinopec) and Qatar Petroleum (QP) for 2 million tonnes per annum (mtpa) of LNG. This was followed by several other major LNG deals prior to Russia invading Ukraine.

In the zero-sum game of emergency global energy supplies, China’s hoarding of LNG prior to the 2022 invasion meant that Europe – critically dependent on Russian gas and oil – would be even more exposed if these supplies suddenly stopped. Russia had been banking on this to produce the same response from Europe to its 2022 invasion of Ukraine as had occurred after its 2008 invasion of Georgia and its 2014 invasion of Ukraine and subsequent annexation of Crimea. That is, Russia expected Europe to do absolutely nothing meaningful to sanction its aggression. The Kremlin was nearly right in its calculations, with the effective leader of the European Union (E.U.) – Germany – only concerned about ensuring its own continuity of gas and oil supplies from Russia in 2022 at all costs, as also analysed in detail in my new book on the new global oil market order. Its acquiescence to Russian hostility yet again was only stopped when the U.S. with U.K. support in Europe and the Middle East worked to establish new emergency supplies of LNG from elsewhere. This determination to never again allow the European Union states to just roll over in the face of Russian aggression due to their over-reliance on Russian energy is the second key reason why the U.S. continues to mercilessly target its LNG sector.

The third reason is that energy exports remain the foundation stone of Russia’s essentially petro-economy and that it was intending to counterbalance the reduction of income from pipelined oil and gas with rises in LNG supplies. Indeed, according to comments from its Deputy Prime Minister Alexander Novak on 22 November last year, Russia intended its LNG market share to rise to 20 percent (at least 100 million tons per year) by 2030, from the current 8 percent (around 33 tons in 2023). As also analysed in my new book on the new global oil market order, Russia earned nearly US$100 billion from oil and gas exports during the first 100 days of the war in Ukraine. Overall, revenues from the higher post-invasion oil and gas prices were much greater than the cost for Russia of continuing to fight the war. However, as prices started to weaken again and sanctions increasingly hit Russia, its finances and ability to secure an outright military victory have been significantly reduced. So desperate has the situation become for President Vladimir Putin that he risked arrest in December to visit Saudi Arabia’s Mohammed bin Salman, and the UAE’s Mohamed bin Zayed al Nahyan, to plead for greater cuts in OPEC oil production in order to push prices up. Again, in the zero-sum game of the global energy market, Russia’s LNG losses from sanctions will be a gain for the U.S. and those LNG suppliers it regards as allies, which now includes Qatar. As it stands now, the Emirate will account for about 40 percent of all new LNG supplies across the globe by 2029, according to comments from its government. The U.S. has seen its LNG exports go from zero before 2016 to around 124 billion cubic metres (bcm) this year, and it is expecting another 124 bcm to come online by 2030. Meanwhile, according to the International Energy Agency, Russia’s share of internationally traded natural gas is forecast to fall from just around 30 percent in the year before it invaded Ukraine to about 15 percent by 2030. Its revenue from natural gas sales is projected to drop from around US$100 billion in 2021 to less than US$40 billion by 2030.

The fourth and final reason why Washington is so determined to effectively destroy Russia’s LNG sector over the long term is that it is an industry so closely associated in Russia with President Vladimir Putin personally. He has long seen LNG – particularly from the country’s huge gas resources in the Arctic – as the key to Russia’s next major phase of energy growth, rather as shale oil and gas was for the U.S., as also detailed in my new book on the new global oil market order. The Russian Arctic sector comprises over 35,700 billion cubic metres of natural gas and over 2,300 million metric tons of oil and condensate, the majority of which are in the Yamal and Gydan peninsulas, lying on the south side of the Kara Sea. According to comments by Putin, the next few years will witness a dramatic expansion in the extraction of these Arctic resources, and a corollary build-out of the Northern Sea Route (NSR) – the coastal route of which crosses the Kara Sea - as the primary transport route to monetise these resources in the global oil and gas markets, especially to its key geopolitical and financial ally, China. Such was Putin’s determination to move ahead with Russia’s Arctic LNG projects that various heavyweight Russian entities were inveigled around the time the U.S. imposed its 2014 sanctions to finance key parts of them. The Russian Direct Investment Fund, for example, established a joint investment fund with the state-run Japan Bank for International Cooperation with each contributing half of a total of about JPY100 billion (then US$890 million) to it. The Russian government itself bankrolled Arctic LNG 1 from the beginning with money from the state budget. It then supported it again when sanctions were introduced by selling bonds in Yamal LNG (the first part of the Arctic LNG programs), and then by providing another RUB150 billion of backstop funding from the National Welfare Fund.

By Simon Watkins for Oilprice.com