At the turn of the century – just over two decades ago – the United States had a bleak outlook on domestic natural gas production, with many speculating increased natural gas demand would have to be met with costly imports. But as we close out 2021, the Energy Information Administration is forecasting that America will be the world’s top liquefied natural gas exporter by next year.

What happened in such a short time to take the country from a position of energy scarcity to one of global LNG dominance? One word: Shale.

In 2003, Time ran an article with the headline “Why U.S. Is Running Out of Gas,” that explained:

“This comes at a time when Americans are heading into their first big energy squeeze since the 1970s: a shortage of natural gas, the invisible resource used to heat homes, fuel kitchen appliances, generate electricity and manufacture many of the chemicals we use.”

Since that time abundant natural gas production has enabled U.S. manufacturing to grow, drastically reduced power sector emissions, and allowed the United States to become a net exporter instead of relying on other countries to meet the bulk of our energy needs. It’s also helped ensure a reliable supply of affordable energy for Americans.

The United States became the third largest LNG exporter behind Qatar and Australia in 2020, following a 2019 prediction by EIA that it would surpass the two countries’ export capacity by 2025.

EIA has since bumped up its forecast for when the United States will become the world’s largest LNG exporter to as soon as next year – three years ahead of schedule.

The transition that has occurred in a relatively short time is truly remarkable when you think about it:

The Baseline

The Paris Climate Accord uses 2005 as a baseline for commitments to reduce emissions. In the world of oil and natural gas, it is just one year after Range Resources drilled the first Marcellus Shale well in the Appalachian Basin, taking the shale revolution beyond Texas.

According to the Federal Energy Regulatory Commission, it was also the year natural gas prices reached “historically high levels,” “trading for as much as $16.00 per MMBtu in national production area spot markets during the early fall.”

In 2005:

• The United States produced 1 trillion cubic feet (tcf) of natural gas and consumed 22 tcf.
• The United states imported 3 tcf of natural gas, with 631.3 billion cubic feet (bcf) – about 15 percent – entering the country as LNG.
• The United States exported 6 bcf of natural gas, 65.4 bcf – about 9 percent – of which left the country as LNG.
• Natural gas fueled about 19 percent of U.S. electricity generation.
• Total U.S. greenhouse gas (GHG) emissions were 7,432 million metric tons of CO2 equivalent (Mmt CO2e) and power sector CO2 emissions were 2,400.1 Mmt CO2e.

By 2009, the United States had surpassed Russia as the world’s largest producer of natural gas and conversations began to shift from the need to import to the potential to export U.S. LNG.

U.S. LNG Exports Kick Into High Gear

The first shipment of U.S. LNG from the lower-48 states was exported from Sabine Pass in February 2016, and as Reuters reported shortly before the shipment left Louisiana:

“Expected to become an importer of LNG just a decade ago, the shale gas revolution in the United States that unlocked cheap, abundant supplies has wreaked havoc on global gas markets as LNG meant for the country was redirected around the world.”

In 2016:

• The United States produced 26.6 tcf of natural gas and consumed 4 tcf – nearly 47 percent and 25 percent increases, respectively, since 2005.
• The United States imported 3 tcf of natural gas with 88.4 bcf of that coming into the country as LNG. That’s a 30 percent reduction in U.S. natural gas imports since 2005.
• The United States exported 2.3 tcf with 186.9 bcf of that leaving the country as LNG. That’s a 215 percent increase in total natural gas exports and more than double the LNG the United States exported in 2005 – in only the first year of U.S. LNG exports from the lower 48-states.
• Natural gas fueled nearly 34 percent of U.S. electricity generation – an 81 percent increase in natural gas net generation since 2005.
• Total U.S. GHG emissions were 6,520.3 Mmt CO2e and power sector CO2 emissions were 9 Mmt CO2e. GHG emissions fell 12 percent while power sector emissions decreased 25 percent since 2005.

For perspective on how much of that LNG came out of the lower-48: In 2015 the United States only exported 28.4 bcf of LNG. By 2017, the country became a net natural gas exporter for the first time in 60 years.

In terms of prices, EIA data shows a decrease at the Henry Hub from a yearly average of $8.69 per million Btu in 2005 to $2.52 in 2016. The monthly disparages are even greater: In October 2005, natural gas prices hit a yearly high of $13.42 while the spot price in December 2016 – the highest price for that year – was just $3.59.

U.S. Natural Gas Breaks Records, Resulting in Lower Prices and Emissions

By 2019 – just three years after the first LNG shipment left Louisiana – the world could not ignore that the United States would play a major role in transforming global energy markets. As IEA Executive Director Fatih Birol said at the time:

“The second wave of the U.S. shale revolution is coming. It will see the United States account for 70 percent of the rise in global oil production and some 75 percent of the expansion in LNG trade over the next five years.  This will shake up international oil and gas trade flows, with profound implications for the geopolitics of energy.”

Importantly, increased natural gas production also helped significantly reduce emissions domestically in the power sector – 33 percent reduction from 2005 to 2019 – even as total electricity generation increased by 2 percent. As EIA explains:

“[B]etween 2005 and 2019 cumulative U.S. CO2 emissions reductions from shifts in electricity generation from coal to natural gas and to non-carbon generation totaled 5,475 MMmt. Of this total, 3,351 MMmt resulted from decreased use of coal and increased use of natural gas.”

In 2019:

• The United States produced nearly 34 tcf of natural gas and consumed 31 tcf. That’s 88 percent and 41 percent increases, respectively, since 2005.
• The United States imported 2.7 tcf of natural gas with 52.9 bcf of that coming into the country as LNG. That’s a 36 percent reduction in U.S. natural gas imports since 2005.
• The United States exported 4.7 tcf of natural gas with 1.8 tcf of that leaving the country as LNG. That’s a 546 percent increase in total natural gas exports since 2005, and nine times the LNG exported in 2016.
• Natural gas fueled 38 percent of U.S. electricity generation – a 108 percent increase in natural gas net generation since 2005.
• Total U.S. GHG emissions were 6,558.3 Mmt CO2e and power sector CO2 emissions were 1,606 Mmt CO2e. GHG emissions fell 12 percent while power sector emissions decreased 33 percent since 2005.

Despite the significant increase in both LNG and total natural gas imports since 2016, natural gas spot prices remained fairly consistent, averaging $2.56 at the Henry Hub in 2019.

Today and Into the Future

It’s incredible when one really stops to think about how much U.S. and global energy markets have changed since 2016 – and the United States has been at the forefront of accelerating those changes to increase reliability and accessibility, while decreasing costs and emissions.

And given EIA’s recent forecast, it’s going to continue to play a major role in transforming energy markets by providing the world with cleaner, U.S. LNG.