White Papers US Gas and LNG Markets | Page 4

US Gas and LNG Markets - Continuing Challenges are Forecast Pipeline exports are expected to grow as well. Though some natural gas is exported to Canada via pipelines in New York and Michigan, those volumes are more than offset by Canadian imports in the western US. Mexico has become an increasingly important market for gas exports - helping to alleviate a backlog of supply in the southern US, particularly in West Texas. With the recent liberalization of the Mexican gas markets, US natural gas is increasingly suppling power generation and industrial demand in that country. Though exports to Mexico have grown rapidly in the last couple of years - from 2.0 bcfd in 2014 to 4.6 bcfd in 2018 - current forecasts expect demand for US gas to moderate as more Mexican domestic supplies are brought on-line and construction of new power plants slows. Overall, the EIA forecasts pipeline exports into Mexico will top out at 7.0 bcfd by 2050. A ComTechAdvisory Whitepaper LNG exports are expected to have the greatest impact on the future supply & demand balance as several new liquification and export facilities are completed and brought online over the next 10 years. In fact, the EIA projects that LNG exports will grow from 2.8 bcfd in 2018 to over 13.7 bcfd in 2030. However, after 2030, current EIA forecasts note that US-produced LNG is expected lose its price advantage compared to other global suppliers (as US domestic gas prices increase on tightening supply) and anticipates little or no growth in LNG exports from 2031 to 2050. In all, total US domestic demand (net of exports) for natural gas is expected to grow from 29.34 TCF/year to 35.0 TCF/year in 2050. Factoring in exports, US domestic natural gas production will need to increase from 29.5 TCF/year to 43.4 TCF/year (or almost 119 BCFD) in order to maintain market equilibrium. LOOKING CLOSER AT LNG In the 1990’s, most forecasts indicated that the US would require significant new quantities of imported oil and gas, and as such, several LNG import facilities were constructed along the Gulf Coast and in the Northeastern US to supply natural gas to the US markets. However, with the advent of long-lateral horizontal drilling techniques and massive hydraulic fracturing, vast new supplies of both oil and gas were opened for development in the tight sand and shales deposits across the US, leading to the country becoming a net exporter of both oil and gas in the last couple of years. Simultaneously, the expanding global “green” movement is increasing demand for natural gas to replace, in part, coal for power generation. Coal to gas switching is not only forecast to grow in the US, but also in the European markets where coal is being rapidly retired and in the Asian markets, where the pace of construction of new coal-fired generation is slowing, despite increasing demand for power to support rapid economic growth. As © Commodity Technology Advisory LLC, 2019, All Rights Reserved.