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Page added on October 7, 2015
United States Will Be Net Exporter of Natural Gas by 2017
The United States’ natural gas demand is currently growing at the fastest pace since the early 1970s, and demand growth has now supplanted supply growth as the cornerstone for the outlook of the U.S. natural gas industry over the next five years, according to a new CoBank research report.
The newly issued report entitled “U.S. Natural Gas Outlook through 2020: Demand Is the New Captain of the Ship,” points out that the promise of low-cost, reliable natural gas supplies has spurred major investments by all end-users. As a result, the demand for U.S. natural gas will grow 25 percent over the next five years, with gas exports accounting for over half the growth.
A portion of the gas exported from the U.S. will be pipelined to Mexico, but most of it will be liquefied and then loaded onto tanker ships destined for overseas markets in Europe and Asia. The report projects that the U.S. will become a net exporter of natural gas within the next two years, transforming the United States into a major supplier to the global energy markets. “It’s definitely a game changer for the global gas markets,” said Taylor Gunn, the author of the report.
Vast quantities of natural gas have been unleashed since 2008 thanks to advancements in hydraulic fracturing and horizontal drilling. The nation’s total dry natural gas production is projected to increase by 29 percent over the next five years, paralleling the growth in demand. Even with the large projected growth in the nation’s demand and supply of natural gas, natural gas prices are expected to remain little changed from their current low levels – hovering well below $5 per MMBtu over the next five years.
The report was produced by CoBank’s Knowledge Exchange Division, which is a knowledge-sharing practice that provides strategic insights regarding the key industries served by CoBank. Knowledge Exchange draws upon the internal expertise of CoBank, deep knowledge within the Farm Credit System and boots-on-the-ground intelligence from customers and other stakeholders to enhance the collective understanding of emerging business opportunities and risks.
8 Comments on "United States Will Be Net Exporter of Natural Gas by 2017"
dissident on Wed, 7th Oct 2015 3:26 pm
Great, just in time to feed the EU who desperately want to stop buying cheap natural gas from Russia.
The US should hurry up its LNG terminal construction.
rockman on Wed, 7th Oct 2015 3:44 pm
“Vast quantities of natural gas have been unleashed since 2008 thanks to advancements in hydraulic fracturing and horizontal drilling.” This person seems very confused. First, despite the “unleashing” accomplished by frac’ and hz drilling the US is still a net NG importer today. Not by much but a net importer none the less. And then go on and on about the growth in domestic demand and then imply well have more NG production then demand. And this despite the gods at the EIA predicting a decrease, at least for the next few years, in NG drilling in the US. A prediction that seems to be confirmed by the drop in the number of rigs drilling for NG and the huge drop in rigs drilling for shale oil along with the NG associated with those wells.
As far as: “…natural gas prices are expected to remain little changed from their current low levels – hovering well below $5 per MMBtu over the next five years.” Actually about 50% lower than $5/mcf. And this will lead to more NG drilling? And regardless of the domestic supply of NG it will be many years before sufficient LNG plants come on line to export even a very small % of our domestic production. And that assumes they’ll all come on line. A rather questionable assumption IMHO given that global LNG prices have fallen by more than ½ in recent years
frankthetank on Wed, 7th Oct 2015 3:50 pm
I was under the impression that the US imports natural gas from Canada. Why wouldn’t the EU get it from Iran or Qatar if not from Russia?
Boat on Wed, 7th Oct 2015 6:49 pm
Rockman,
That’s the amazing deal with nat gas. They are setting record production with less than 200 drillers. A decade ago it was like 1600 drillers for less gas.
rockman on Wed, 7th Oct 2015 7:42 pm
Boat – Indeed. And I think most of the credit goes to the Marcellus. From almost nothing to almost 20% of total US production.
rockman on Wed, 7th Oct 2015 7:58 pm
Frank – Yes. And export a good bit to Mexico. The EU doesn’t care where the LNG comes from: as long as the source is secure and the LOWEST PRICE. IMHO it is going to be difficult for US companies that have to buy NG to compete with Persian Gulf NOC’s that esentially get their NG for free. If they don’t sell the LNG they’ll just flare the NG.
makati1 on Wed, 7th Oct 2015 8:06 pm
Frank, they will, if possible. This is another BS article from the LNG dreamers.
“While the United States is predominately an LNG importer, one existing LNG export, or liquefaction, terminal is located in Kenai, Alaska. LNG from this facility is predominantly being exported to Japan. Nine additional LNG liquefaction projects have been proposed throughout the United States.
There are eleven existing regasification, or import, LNG terminals in the United States. These facilities are located in Pascagoula, Massachusetts; Hackberry, Louisiana; Lake Charles, Louisiana; Sabine Pass, Texas; Freeport, Texas; Everett, Massachusetts; Cove Point, Maryland; and Elba Island, Georgia. LNG is imported to these facilities from Trinidad and Tobago, Algeria, Egypt, Malaysia, Nigeria, Qatar and Oman.”
http://www.energy.ca.gov/lng/worldwide_united_states.html
“…United States Department of Energy issued an order granting long-term, multi-contract authorization to Texas LNG, to export liquefied natural gas from the ‘proposed facility’ at the Port of Brownsville…. first production expected in early 2020…”
http://www.lngworldnews.com/texas-lng-receives-does-export-approval/
Note the words: “Proposed facility” Did it ever get started? 2020 before it can open?
This is typical of the LNG idea. Proposals but no actions. Dreams but no reality.
rockman on Thu, 8th Oct 2015 7:17 am
Frank – Another important factor: essentially no one can invest $billion into building an LNG export facility unless they have buyers who are contracted to buy a set amount at a set price. Usually a 15 to 20 year contract. And the contract has to be bonded to insure that they buyer will pay regards of the situation years out. Likewise the LNG producer has to contract for sufficient NG purchase to be able to meet its contractor requirements. And again that also has to be bonded.
You can get more details on how the LNG producer can have a fixed profit margin by going to Chenier’s web site. It also shows why LNG buyers have to be very cautious: NG might be selling for $2.80/mcf today. In 10 years if it’s selling for $12/mcf the buyer is obligated to pay that amount plus the liquefaction and transport costs as well as the LNG producer’s profit margin. They buyers can always cancel those contracts but the penalties could run into the hundreds of $millions.
Buying long-term LNG is not for the faint of heart. LOL.