Let It Flow - Factors Affecting Feedgas Demand and LNG Exports in 2019

With U.S. natural gas production levels near all-time highs and storage injections running strong, LNG exports will be a critical balancing item for the domestic gas market this year. Yet feedgas demand in recent months has been anything but stable; rather, it’s proving to be susceptible to volatility, driven by a combination of offshore weather conditions, maintenance events, start-up activity and global market conditions, among other factors. At the same time, timelines for the remaining 20 MMtpa (2.6 Bcf/d) of new liquefaction capacity still due online this year are moving targets as coastal weather, construction-related delays and other variables affect target completion dates. Today, we discuss highlights from our new Drill Down Report on the impacts of recent and upcoming LNG export capacity additions.

Before we get to that analysis, a quick reminder for those interested in hearing about export trends directly from the companies driving them — there’s still time to register for our xPortCon conference in Houston on May 21. You can download the full agenda here.

In just over three years, U.S. LNG exports have gone from zero to a single-day peak of nearly 5.8 Bcf/d this past winter. In doing so, they have transformed the demand profile of the domestic natural gas markets, reshuffled physical gas flows along the Texas and Louisiana coasts and changed pricing relationships across much of the country. And those are just the domestic effects of the export phenomenon — the rise of LNG exports from the U.S. also has shaken up international markets. Figure 1 shows just how remarkable the growth in total U.S. gas exports (teal layer on the left axis) has been over the past five years relative to Lower-48 gas production (green layer on the left axis). Back in 2014, total exports — at that time, comprised entirely of pipeline exports to Canada and Mexico — were 6% of total Lower-48 gas production (burgundy line on the right axis); in recent months, exports have climbed to nearly 12% of total production. Moreover, with the rise in exports in recent years, the U.S. has become a year-round net exporter of gas.

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