IGU: U.S. LNG Poised To Become A Global Powerhouse
The Covid-19 pandemic and harsh winter brought exceptional challenges across the globe, including energy demand fluctuations. But, as the International Gas Union’s recent report on global liquefied natural gas found:
“The LNG sector adjusted to significant demand fluctuations with incredible agility. From the huge drops in demand levels at the height of the pandemic lockdowns, through exceptional spikes when the winter deep freeze sent the world’s energy systems into crisis. LNG, quite literally, delivered.” (emphasis added)
IGU’s report foresees a positive outlook for the global LNG industry, including in the United States, which led the world in growth of this resource.
This is not surprising. In just a short period of time, the United States has become an LNG powerhouse. The country’s meteoric rise started with the first commercial LNG export cargo from Cheniere’s Sabine Pass facility in Louisiana back in 2016. Since then, the United States has become the third largest LNG exporter and is rapidly catching up with commercial rivals Qatar and Australia.
Today, the United States has six LNG export facilities online, and multiple new projects are expected to start operations, or be approved, shortly.
Some key facts that highlight the U.S. LNG industry’s dominance in this space are:
United States led global trade growth
- According to IGU, 2020 exports grew by 1.4 million tons (MT), following the already cemented upward trend in global LNG trade. Growth reported for last year might seem moderate, especially when compared to the 40.9 MT registered in 2019, but was impressive given the demand declines early in the year as a result of the pandemic.
- Growth in exports was driven by the United States, which contributed with over 11 MT, quenching the Asian markets’ thirst for LNG, which “accounted for more than 70 percent of global LNG imports”.
- While U.S. exports represent 13 percent of the global LNG trade, both growing Asian demand and new U.S. liquefaction capacity will change the historic game, positioning the United States closer to Qatar and Australia.
Global liquefaction capacity growth was all in the United States
- In 2020, 20 million tons (MT) of liquefaction capacity were added to the global capacity, totaling 452.9 million tons per year (MTPA). All that new capacity came from the United States.
- Simply put, all new infrastructure projects that went online during the last year are U.S.-based projects, including the Freeport LNG T2-T3 (10.2 MTPA), Cameron LNG T2-T3 (8 MPTA) and Elba Island T4-T10 (1.75 MTPA).
- In fact, North America has shown the greatest liquefaction capacity growth in recent years –a gargantuan task considering that the U.S. LNG export capacity first started just five years ago.
- However, U.S. LNG capacity is expected to grow times five, from 69.1 MTPA in 2020 to a potential 351.6 MPTA by 2021 or within the short term.
- According to the report, there are currently 892.4 MTPA of aspirational liquefaction capacity projects in pre-Financial Investment Decision (FID) all over the world. Nearly 40 percent of the proposed liquefaction capacity comes from future U.S. LNG liquefaction projects.
LNG demand can only go up
- Despite being hit first by the COVID-19 pandemic, Asia was responsible for LNG import growth in 2020. China, India, Taipei and South Korea increased LNG demand by 11.7 MT more than the previous year.
- In fact, all of the top five LNG importers are Asian countries, accounting for 63 percent of the total LNG import share.
- Looking ahead, another highlight of the report – which can only spell good news for the blossoming U.S. LNG industry – is the fact that demand from Asia will continue to grow as a result of increased import capacity. During 2020, China, Taipei, India and Myanmar reported 12.9 MTPA of new LNG import capacity.
- Moreover, as of February 2021, 19 onshore and 10 floating regasification terminals are under construction all over the world. New expected regasification capacity will reach 72.3 MTPA by the end of 2021.
Not only did the global LNG market show its agility and resiliency in 2020 in the face of unprecedented events, but as the report shows, the world is preparing to embrace natural gas as an affordable, reliable and cleaner form of energy. And the United States is poised to be a major supplier of this resource thanks to its growing LNG export industry.