U.S. LNG export capacity is expected to more than double by the end of 2019, rising to 8.9 billion cubic feet per day (Bcf/d), up from 3.6 Bcf/d currently. This will be enough to make the U.S. the third largest LNG exporter after Australia and Qatar. The U.S. only began exporting LNG in early 2016, Petrochemical Update reported.
U.S. LNG export capacity will reach 8.9 Bcf/d by the end of 2019, making it the third largest in the world behind Australia and Qatar. Currently, U.S. LNG export capacity stands at 3.6 Bcf/d, and it is expected to end the year at 4.9 Bcf/d as two new liquefaction units (called trains) become operational, according to the U.S. Energy Information Administration (EIA).
The U.S. began exporting LNG from the lower 48 states in February 2016, when the Sabine Pass liquefaction terminal in Louisiana shipped its first cargo.
U.S. Projects
Since then, Sabine Pass expanded from one to four operating liquefaction trains, and the Cove Point LNG export facility began operation in Maryland. Two more trains—Sabine Pass Train 5 and Corpus Christi LNG Train 1—began LNG production in 2018, several months ahead of schedule, and are expected to ship their first cargos within the next few weeks.
Two more LNG export facilities—Cameron LNG in Louisiana and Freeport LNG in Texas—are currently being commissioned.Commissioning of liquefaction facilities involves introducing natural gas feed into the train and ultimately producing LNG. For liquefaction terminals, which use refrigeration to cool natural gas into liquid form, commissioning also includes getting the equipment and refrigerants down to sufficiently cold temperatures.
The first LNG production from these facilities is expected in the first half of 2019. The developers of these projects expect all three trains at Cameron LNG and two trains at Freeport LNG to be placed in service in 2019.
The Elba Island LNG facility near Savannah, Georgia, is also scheduled to become fully operational by the end of 2019. Elba Island LNG consists of 10 small modular liquefaction units with a combined capacity of 0.33 Bcf/d. Project developers expect LNG production from the first train to begin early next year and from the remaining nine trains to commence sequentially through the rest of 2019.
The second train at Corpus Christi LNG is scheduled to be placed in service in the second quarter of 2019. The final two trains of the U.S. liquefaction projects currently under construction—Freeport Train 3 and Corpus Christi Train 3—are expected in service in the second quarters of 2020 and 2021, respectively.
Four additional export terminals—Magnolia LNG, Delfin LNG, Lake Charles, Golden Pass—and the sixth train at Sabine Pass have been approved by both the U.S. Federal Regulatory Commission and the U.S. Department of Energy, and they are expected to make final investment decisions in the coming months. These proposed projects represent a combined additional LNG export capacity of 7.6 Bcf/d.
U.S. LNG exports continue to increase with the growing export capacity. The U.S. EIA’s latest Short-Term Energy Outlook forecasts U.S. LNG exports to average 2.9 Bcf/d in 2018 and 5.2 Bcf/d in 2019 as the new liquefaction trains are gradually commissioned and ramp up LNG production to operate at full capacity.
Demand
U.S. LNG deliveries to China have surged as low prices encouraged buyers to switch from coal. China has been the third-biggest importer of U.S. LNG in 2018, behind South Korea and Mexico, according to figures from LNG Edge.
Demand for LNG grew by roughly 10% or 29 million tonnes to 293 million tonnes in 2017 as more economies try to transition away from coal-fired power generation and use cleaner-burning natural gas as a substitute, Shell said in its February 2018 LNG Outlook.
Looking ahead, Shell is convinced that there could be a 275 million tonne supply shortage beginning in 2020.
“As much as $200 billion in new investments will be needed to build liquefaction plants around the world as demand “has continued to defy expectations,” according to Shell.
Wood Mackenzie's latest research reveals that uncontracted demand by the world's seven largest LNG buyers could quadruple to 80 million tonnes per annum (mmtpa) by 2030.
The major LNG buyers—CNOOC, CPC, JERA, KOGAS, PetroChina, Sinopec and Tokyo Gas— together account for more than 50% of the global LNG market.
After several quiet years, these Northeast Asian players have become active again in global LNG contracting activity, with over 16 mmtpa of contracts announced in 2018, the energy research firm said.
“As China pushes on towards a lower-emission economy, its demand for gas and LNG has grown significantly and we expect the trend to continue in the longer term,” Wood Mackenzie research director Nicholas Browne said.
On the supply front, Wood Mackenzie predicts that 2019 could be a record year for LNG project sanctions with over 220 mmtpa of gas targeting final investment decision (FID). Some of the less prepared or competitive projects will slip into 2020 and beyond, but nonetheless a bumper year beckons.
Frontrunners to get the green light, according to Wood Mackenzie, include the $27 billion Arctic LNG-2 in Russia, at least one project in Mozambique and three in the U.S. Nearer to Asia, expansion and backfill projects in Australia and Papua New Guinea will also be in the running.
“Looking forward, 2019 will be the biggest year ever, in terms of LNG capacity sanctioned, for liquefaction project FIDs. Asia’s major buyers will be at the forefront in ensuring this next generation of LNG supply is brought to market,” Browne said.
