(by Paul Vivian and Rick Preckel, www.prestonpipe.com) Market Monitor – Last month, we reported on the four projects that are directly impacted by the Biden Administration’s temporary pause on pending LNG export applications. Commonwealth LNG, Sempra (Train 3 & 4 expansion), Lake Charles LNG, and Magnolia LNG. These projects combine for 6.3Bcf/d of export capacity. Another two projects would be affected by a long-term pause, those include Calcasieu Pass 2 and CCL Midscale Trains 8 & 9, which add 3.1 bcf/d, for a total of 9.4 bcf/d not including any impact to unannounced projects. It has become clear over the past 2+ years that LNG will play an important role in global energy for years to come. The consequences of this regulatory pause are complex, and it is presumptive to assign credit wholely to one event, but the world has begun to react. Qatar, the world’s lowest-cost natural gas producer and second-largest LNG exporter in 2023, has announced plans to increase LNG exports by 85% by 2030, from 10.3 bcf/d to 18.95 bcf/d. For reference, the EIA reports current US capacity at 11.4 bcf/d with another 9.7 bcf/d under construction. It is likely that other gas-rich countries will continue to capitalize on the uncertainty in the future growth of the US market. On the import side, the pause has led many countries, including several US allies, to shop around for new offtake agreements to maintain energy security. Oil and gas producers are feeling the squeeze at both ends. Associated gas production is growing in oil-focused basins, environmental regulations are leading to increased gas recovery, domestic consumption is ~flat, and the future growth of LNG exports as a demand center is now less certain. The developments following the regulatory pause highlight the need for a longterm US energy policy and the instability that can be created by its absence.
Preston Pipe Report – March 2024
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