LNG Remains Stuck Between a Rock and a Hard Place

Though U.S. exports of liquefied natural gas (LNG) are down sharply from year-ago levels, the sector should recover in an ever-changing market.

There were 22 vessels laden with LNG that left U.S. export terminals between April 4 and April 10, carrying a combined 75 billion cubic feet (Bcf) of product.

Over the similar period last year, 26 vessels left U.S. terminals carrying 96 Bcf of product. Domestic consumption declined by 2.4% from the prior seven-day period, with the residential sector accounting for the bulk of the slump. Gas exports to Mexico increased, meanwhile, as did deliveries to LNG export terminals.

LNG deliveries remain relatively high, though the domestic energy sector continues to face headwinds due to maintenance issues. The Freeport LNG facility in Texas remains problematic, with two liquefaction trains offline until at least May.

Nevertheless, the decline in deliveries is temporary. The Energy Information Administration, part of the U.S. Department of Energy (DOE), said the outage at Freeport should not make or break the market given lower LNG demand.

Later this year, the first phase of operations at Venture Global LNG's (Arlington, Virginia) Plaquemines LNG facility in Louisiana should commence. This phase will provide nominal capacity of 1.3 Bcf/d. Subscribers to Industrial Info's Global Market Intelligence (GMI) Oil & Gas Production Project Database can learn more by viewing the project reports on Phase I and Phase II.

Also, cargo should be loaded by the end of the year from the third stage of Cheniere Energy Incorporated's (NYSE:LNG) (Houston, Texas) terminal at Corpus Christi, Texas.

"In 2025, the developers of the Golden Pass LNG plan to place the first two trains of this new three-train LNG export facility in service," the EIA's short-term market report for April read. Located in Sabine Pass, Texas, Golden Pass is a joint venture between QatarEnergy (Doha, Qatar) and Exxon Mobil Corporation (NYSE:XOM) (Spring, Texas). Subscribers can click here for the project report.

The EIA adds that deliveries should end the year 2% higher than last year.

LNG can be both a blessing and a curse. The super-cooled natural gas can be transported by ship, alleviating some of the geopolitical concerns tied to interstate pipelines. Cold War dynamics, for example, are playing out in the European energy sector as U.S. LNG supplies take on some of the market share that Russia lost due to the war in Ukraine.

"The bottom line is that you cannot accelerate climate action and expand dirty liquified natural gas (LNG) simultaneously," stated climate campaign group Oil Change International. "Climate experts and energy analysts have long called this a misnomer."

U.S. President Joe Biden opted for a pause in new LNG permits while his administration weighs the environmental impact. But the president still believes LNG is an important asset.

"The United States remains unwavering in its commitment to support the energy security of Japan and other allies, including its ability to predictably supply LNG while accelerating the global transition to zero-emissions energy and working with other fossil energy importers and producers to minimize methane emissions across the fossil energy value chain to the fullest extent practicable," a joint statement with Japan's Prime Minister Kishida Fumio read.

A race may be on to tap into the booming economies of Asia. Major economies such as Japan have few resources of their own and depend heavily on foreign deliveries to address natural gas demand.

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