Higher LNG exports to drive up US natgas prices, EIA projects
May 24 (Reuters) — Increasing exports of U.S. liquefied natural gas (LNG) through 2050 will raise domestic prices for natural gas, the Energy Information Administration (EIA) said on Wednesday.
In a supplement to its Annual Energy Outlook 2023, the EIA studied the impact on natural gas prices at the Henry Hub in three scenarios with varying levels of LNG exports.
The EIA said in the case of lower international prices, the U.S. may export 15.3 billion cubic feet per day (bcfd) of LNG in 2050, projecting Henry Hub prices at $3.30 per million British thermal units (mmBtu).
In the opposite case of higher international prices together with faster development of export facilities, the EIA saw 48.2 bcfd of LNG exports and Henry Hub prices at $4.30 in 2050.
U.S. natural gas futures were trading about $2.40 per mmBtu on Wednesday, while analysts forecast prices at the Henry Hub benchmark in Louisiana averaging $3.23 in 2023, their lowest since 2020, before rising to $3.71 in 2024.
The agency forecast that overall gas exports, both by pipeline or as LNG, will become the largest component of U.S. natural gas demand by the early 2030s.
U.S. LNG exports facilities currently have an operating capacity of 11.4 bcfd, with an additional 7.3 bcfd under construction and another 18.3 bcfd capacity approved but awaiting a final investment decision, the EIA said.
The U.S. became the world’s largest LNG exporter in the first half of 2022, averaging nearly 11.2 bcfd of exports that made up 12% of dry natural gas production, it added. (Reporting by Ananya Bajpai and Deep Vakil in Bengaluru Editing by Marguerita Choy)
Related Knowledge Center: Liquefied natural gas
Driven by plentiful natural gas produced from shale plays, the United States began exporting liquefied natural gas in 2016 when the Sabine Pass terminal in Louisiana opened and shipped its first cargo. Since then, additional capacity, or trains, have been added to Sabine Pass, and terminals have become operational in Cameron Parish, La.; Hackberry, La.; Cove Point, Md.; and Corpus Christi, Texas. The Energy Information Administration projects that U.S. LNG export capacity will reach 8.9 billion cubic feet per day (Bcf/d) by the end of 2019, making it the third largest in the world, behind Australia and Qatar. The tariff war with China has the potential to impact some final investment decisions for additional terminals in the coming months.