U.S. Projected to Be World Leader in LNG Exports in 2022
The United States is projected to outpace all other countries in liquified natural gas (LNG) exports in 2022. The rise of American LNG is being driven by several factors, including the global LNG market, supplies, and unforeseen events that have reshaped dynamics between the U.S. and importing-nations.
LNG is chemically the same as natural gas, but is super-chilled. Cooling natural gas to a temperature of minus-260 degrees Fahrenheit causes a reaction in which the gas is changed into a liquid. Transforming natural gas, which is composed primarily of methane, into liquid does not limit the end uses of the gas, but is done to aid in transporting and storing natural gas. The task of exporting billions of cubic feet of natural gas across oceans is a cumbersome and expensive task. When natural gas is liquified into LNG, it requires much less space to store or transport the fuel, taking up just 1/600th of the volume of the same amount of fuel in its gaseous state. It also allows for the use of ship-based travel, utilizing specially designed tankers to move up to 9.4 million cubic feet of gas across the seas.
Though natural gas is often put through this transformation for storage and transportation, when it arrives at its end use, it is reconverted back to a gaseous form and can be used as such. That is, domestic LNG can be exported to foreign countries to be used for electricity generation, heating, or in petrochemical processes in a much more efficient manner.
The United States has steadily ramped up its LNG exports since 2015 and is poised to become the world’s number one LNG exporter in 2022. The global LNG market’s landscape has changed dramatically in the last nine years. In 2015, the US was not a significant player, exporting practically no LNG, as global LNG exports were dominated by Qatar, with Australia trailing behind as a distant second. From 2016 on, the US has grown its LNG exports nearly ten-fold. According to the U.S. Energy Information Administration (EIA), average daily American LNG exports totaled 9.8 billion cubic feet in 2021, approximately 3.3 billion cubic feet more than 2020’s daily average. For reference, one billion cubic feet of natural gas could power all of the state of Delaware’s natural gas demand for one week. Australia’s LNG exports have also grown over that time period, surpassing Qatar to become the world’s number one LNG exporter for the year 2021.
Continuing with this trend, the EIA states that the U.S. will see even more gains, estimating that daily LNG exports could average 11.5 billion cubic feet, outpacing Austria and Qatar, and becoming the world’s top LNG exporter.
What’s driving this change is a culmination of a growing abundance of U..S natural gas, its affordability compared to foreign markets, and an ever-rising global demand for natural gas. American natural gas was consistently much more inexpensive at the Henry Hub than in Asian and European markets in 2021. The energy crisis in China last year also helped boost domestic LNG.
Facing crippling blackouts from dwindling surpluses, China shifted its stance on purchasing American LNG in 2021, becoming the second-largest importer of U.S. LNG, falling just behind South Korea. This trend is expected to continue. Additionally, the development of three new LNG facilities in Texas and Louisiana is expected to increase American LNG supplies, thus continuing the rise in exports.
American LNG export capacity has grown rapidly and it poised to be the world’s largest in 2022, and the increases in LNG exports are expected to continue in the coming years.