U.S. LNG Is Booming, But Who Supplies The Gas? Part 2 -- Alex Kimani -- December 4, 2022

Look at the timeframe: "... over the next couple of years."

Part one here.

Archived. 

The op-ed begins;

In the current year, five developers have signed over 20 long-term deals to supply more than 30 million metric tons/year of LNG.

Pundits are asking if the United States can ramp up production to meet future demand.  It’s going to be a real challenge for the United States to meet future LNG demand.

Some data points.

The deals:

• June, 2022: German utility EnBW; 20-year deal; US-based exporter Venture Global
• June, 2022: China Gas Holdings; Energy Transfer
• June, 2022: Chevron; Venture Global
• June, 2022: Tellurian; Vitol
• July, 2022: Thailand's PTT; Cheniere Energy
• September, 2022: Australian giant Woodside Energy Group; US-supplied Commonwealth LNG

Overall,

• offtakers have committed to more than ~31 MMtpa of U.S. LNG supply, with term lengths ranging from 15 to 25 years. But a lot more than that is likely to be demanded over the next couple of years.
  

RBN (archived) estimates that 

“…there’s another 100 MMtpa (14.3 Bcf/d) or so of proposed LNG export capacity with a medium-to-high chance of progressing in the next three years, including at least three projects totaling almost 19 MMtpa (2.5 Bcf/d) that we believe are highly likely to take FID within the next 12 months. That’s out of a universe of nearly 30 projects we track in the LNG Voyager Quarterly, representing over 280 MMtpa (38.3 Bcf/d) of potential export capacity, the bulk of it along the Texas and Louisiana coasts.”

Recently, according to RBN Energy:

RBN notes that the Appalachia was, by far, the biggest contributor to U.S. natural gas growth over the last decade. During the timeframe, Lower 48 dry gas production climbed nearly 30 Bcf from an average 70 Bcf/d in 2014 to 99.6 Bcf/d currently, during which Appalachian output more than doubled and drove 18.5 Bcf/d of that overall growth. The Permian came in a distant second, growing production by 11.2 Bcf/d while the Eagle Ford saw production decline by 1 Bcf/d. Meanwhile, the Haynesville was the third-fastest-growing region on an absolute volume basis, up from 9.5 Bcf/d in 2014 to 15.3 Bcf/d currently. Finally, the Anadarko, Niobrara and Bakken rose by a combined 4.6 Bcf/d over the timeframe. 

Going forward, RBN Energy:

However, the energy experts have predicted that the second wave of U.S. LNG growth will favor the southern basins.

RBN estimates that Appalachia has the potential to ramp up production by almost 8 Bcf/d to 42 Bcf/d over the next 10 years if unconstrained by pipeline takeaway capacity.

However, the analysts say that’s unlikely to happen given strong headwinds for midstream development in the region.

The Appalachian Basin is the country’s largest gas-producing region, churning out more than 35 Bcf/d. Unfortunately, environmental groups have repeatedly stopped or slowed down pipeline projects and limited further growth in the Northeast. Indeed, EQT Corp. CEO Toby Rice recently acknowledged that Appalachian pipeline capacity has “hit a wall.” As a result, RBN says production growth in the basin is likely to be closer to just 3 Bcf/d, capping production at just under 38 Bcf/d on an annual average. 

The other plays:

Meanwhile, growth in the Anadarko, Niobrara and Bakken is likely to remain modest, altogether adding ~3.3 Bcf/d to reach almost 15.5 Bcf/d by 2032.

In other words, the bulk of U.S. LNG growth in this post-shale-boom era will come from the Texas and Louisiana basins.

RBN notes that both the Permian and Haynesville have been at the epicenter of midstream development in recent months while the Eagle Ford has been showing signs of a production recovery of late, after a decline in recent years.

Bottom line:

“This assumes significant gas growth from the Permian and other associated gas plays. Any view where oil prices take enough of a dip to slow that activity in the Permian and you’re going to have even more of a call for gas from gassier basins,” the analysts have said.

Either way, it’s going to be a real challenge for the United States to meet those targets because takeaway constraints including limited pipeline capacity are seen as the biggest hurdle to growth of the sector despite the country being home to the world’s largest backlog of near-shovel-ready LNG projects.