Where It's At

As U.S. LNG export project development accelerates along the Gulf Coast, one of the big uncertainties is where will all that feedgas come from? We estimate that there are a dozen Gulf Coast projects totaling 16 Bcf/d of export capacity in the running for completion in the next decade, with 60% of that capacity sited along a less-than-100-mile stretch of coastline straddling the Texas-Louisiana border. One of the major factors that will influence the timing and commercialization of the projects is the availability of feedgas supply where and when it is needed. With pipeline projects and production growth in the Marcellus/Utica shales at a veritable standstill, the Texas and Louisiana production regions — the Permian, Eagle Ford and Haynesville — are the frontrunners for serving the bulk of the resulting Gulf Coast demand growth. Assuming no midstream constraints, RBN’s Mid-case production forecast anticipates growth from the three basins will total 15.5 Bcf/d by 2032. In today’s RBN blog, we look at how well (or not) production levels will line up with feedgas demand.

The first wave of Gulf Coast liquefaction and LNG export facilities was well-timed, coming as it did with fast-rising natural gas supplies in the Lower 48 and a slew of pipeline reversals and expansions that enabled billions of cubic feet a day of low-cost Marcellus-Utica gas supplies to reach Gulf Coast markets. Permian and Haynesville supplies helped too. The next wave of LNG development, which will kick off in earnest in 2024, may not go quite as smoothly, however. Global demand for LNG is there — there’s little doubt about that. But the next phase of export capacity growth may well be hemmed in by domestic factors, namely the timing and availability of gas supplies to the Gulf Coast due to potentially serious midstream constraints. In today’s RBN blog, we look at where the feedgas supply is likely to come from and what that will mean for pricing dynamics.