Daily Energy Blog

The U.S. won’t add new LNG export capacity this year for the first time since it became an exporter in 2016. But that lull is not going to last long. At least five facilities are under construction and due for completion in the next few years, several other expansions were recently sanctioned, and there are more final investment decisions (FIDs) on the way. With export development expected to accelerate in the coming years, the race to debottleneck feedgas pipeline routes is on. More natural gas pipeline capacity will be needed, particularly for moving gas supply to the Louisiana coast, where the bulk of new liquefaction will be sited. In today’s RBN blog, we resume our series on the pipeline expansions targeting LNG export demand, this time highlighting TC Energy’s Gillis Access Project and how it fits into the Louisiana LNG market picture.

For some time now, clean ammonia proponents have been talking up its potential as a very-low-carbon alternative for power plants, ships and other hydrocarbon consumers. Still, rock-solid plans for U.S. projects to produce large volumes of ammonia from clean hydrogen remained few and far between. Until lately, that is, with the recent uptick in project announcements spurred on, in large part, by the supercharged tax credits for carbon capture and sequestration (CCS) in the Inflation Reduction Act (IRA) and the newly firmed-up efforts by power generators in Japan and South Korea to make clean ammonia an important part of their fuel mix going forward. In today’s RBN blog, we discuss the progress that clean ammonia has made since the IRA became law and the growing list of projects advancing to a final investment decision (FID), construction and production.

The Permian natural gas pipeline build-out is entering a new era. With numerous LNG terminals set to expand exports along the U.S. Gulf Coast through the end of this decade, the need to link Permian gas supply to those facilities has never been greater. While there have been three greenfield pipelines built out of the Permian in the last five years, with a fourth on the way in 2024, each has ended in the same general area west of Houston or farther south near Corpus Christi. However, market needs are shifting, with most of the next wave of LNG export capacity to be added east of Houston, closer to Beaumont and in southeastern Louisiana, and those facilities want access to Permian gas. As a result, we weren’t surprised this month when two new proposals to directly link gas from West Texas markets to those export terminals were announced. If built, Targa Resources’ Apex and WhiteWater Midstream’s Blackfin projects could significantly alter Texas gas markets and how Permian supplies move to their final destination. In today’s RBN blog, we look at the latest developments in Texas gas pipeline infrastructure.

From its origins as a specialized energy source sold under long-term, point-to-point contracts to primarily Asian destinations, LNG has become progressively more commodified as its global reach has spread, with 44 countries now importing it. An increasing proportion of cargoes are destination-flexible and can be sent to the market that offers the best price, and the marginal price of LNG is set by supply and demand factors. The spectrum of commercial players has grown and come to resemble more closely the oil market, with not only international oil companies as major participants but also traders and utility buyers, all of whom are contributing to a vibrant international LNG marketplace. But unlike oil and other established commodities, LNG lacks a global reference or benchmark price, and instead is priced regionally, with the divergence in regional market prices giving rise to very profitable arbitrage opportunities for those controlling both product and ships. In today’s RBN blog, we look at the pricing indices used to make LNG trading decisions and two initiatives being implemented by the European Commission (EC) that are intended to improve price transparency for LNG trades and prevent price spikes in European gas markets through a consortium-purchasing approach.

Russia’s invasion of Ukraine in February 2022 caused panic in European gas markets that were already on the brink due to low winter inventories. Near-term supply/demand balances suddenly took on a heightened urgency, and everyone knew that policy and infrastructure changes were needed, pronto. The most immediate concern was the very real possibility that the winter of 2022-23 could see gas rationing within the European Union (EU) due to supply shortages. However, with winter now in retreat, Europe is emerging with record volumes of stored gas accompanied by prices that have fallen to pre-invasion levels. This is no time for complacency, though. While it’s many months away, the winter of 2023-24 looms, with dire warnings that things could be considerably worse in gas markets. In today’s RBN blog, we evaluate how European gas and LNG markets have managed over the last 12 months and discuss the implications for the next year. In particular, we look at the European Commission’s (EC) efforts to inject reforms into European gas markets, not only to accommodate supply disruptions but also to set the stage for a gas market no longer reliant on Russian supplies.

New England’s aggressive effort to decarbonize is a tangled web. Over the past several years, the six-state region has replaced oil- and coal-fired power plants with natural gas-fired ones but most proposals to build new gas pipeline capacity have been rejected. It’s also made ambitious plans to add renewables — especially solar and offshore wind — to its power generation mix but many of the largest, most impactful projects have been delayed or canceled. And now there’s a big push to electrify space heating and transportation, which will significantly increase power demand, especially during the winter months, when New England’s electric grid is already skating on thin ice. In today’s RBN blog, we examine the region’s looming power supply challenges and how its energy transition plans may affect natural gas, LNG, heating oil and propane markets.

LNG exports will be the biggest driver of demand growth for the Lower 48 natural gas market over the next five years. After a year of oversupply in 2023, export capacity additions will help to balance the market and support gas prices in 2024 as the glut spills over into next year. Beyond 2024, higher export volumes will lead to tighter balances and price spikes. As supply struggles to keep up with new export capacity, the timing of pipeline expansions will be critical for balancing the market. The bulk of new LNG export projects are sited along a small stretch of the Texas-Louisiana coastline and more pipeline capacity will be needed to move incremental feedgas into this area and across the “last mile” to the facilities. In today’s RBN blog, we begin a series delving into the planned pipeline expansions lining up to serve LNG demand along the Gulf Coast.