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EIA projections indicate US becoming a net exporter of natural gas

EIA projections indicate US becoming a net exporter of natural gas thumbnail

In its recently released annual energy outlook (AEO2015), EIA expects the US to be a net natural gas exporter by 2017. After 2017, natural gas trade is expected to be driven largely by the availability of natural gas resources and by world energy prices. Increased availability of domestic gas or higher world energy prices each increase the gap between the cost of US natural gas and world prices that encourages exports of LNG and, to a lesser extent, greater exports by pipeline to Mexico.

The AEO2015 examines alternate cases with higher and lower world oil price assumptions, which serve as a proxy for broader world energy prices given oil-indexed contracts, as well as with higher assumed US oil and natural gas resources. These assumptions significantly affect projected growth in annual net LNG exports after 2017. Net LNG exports make up most of the natural gas exports in most cases. By 2040, LNG exports range from 0.2 Tcf in the low oil price case to 10.3 Tcf in the high oil and gas resource case. For comparison, 2040 natural gas net exports by pipeline range from 1.1 Tcf in the high oil price case to 2.9 Tcf in the high oil and gas resource case.

Most of the growth in US net natural gas exports occurs before 2030, as increased domestic natural gas supply satisfies new demand both internationally (with the development of LNG export capacity and growing demand for pipeline exports) and domestically (particularly in the industrial and electric power sectors). Increased shale gas production accounts for three-quarters of the increase in total dry gas production. More than half of the increase in shale gas production comes from the Haynesville and Marcellus formations.

Natural gas net exports are highest in the high oil and gas resource case, which assumes both higher resources and improvements in technology to bring those resources to market. In this case, both net LNG and net pipeline exports in 2040 are higher than in any other AEO2015 case, because higher production capability lowers the cost of US natural gas compared with prices in the world market.

In the high oil price and low oil price cases, projected LNG exports vary in response to the price of oil-linked international LNG contracts. Contract prices are higher in the high oil price case, making US LNG exports more competitive, while the opposite occurs in the low oil price case. However, the relationship between international LNG prices and world oil prices is assumed to weaken later in the projection period, with the most decoupling of oil and natural gas prices occurring in the high oil price case.

US pipeline exports of natural gas increase in all of the AEO2015 cases because increases in Mexico’s production are not expected to keep pace with its growing natural gas demand. On the import side, pipeline imports from Canada, which accounted for 97% of total US gross total imports of natural gas in 2013, continue as the source of nearly all US gross natural gas imports through 2040, except in the low oil price case, where gross imports of relatively less expensive international LNG contributes 22% of total imports in 2040.

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17 Comments on "EIA projections indicate US becoming a net exporter of natural gas"

  1. hiruitnguyse on Tue, 28th Apr 2015 3:52 pm 

    A few funnies here also….

  2. Nony on Tue, 28th Apr 2015 3:56 pm 

    Before some nitwits come here and say how were are still a net importer now, this article is about the future. And look how the amount of net import has been dropping. When those LNG export terminals come on board, that will be a big boost in exports and eventually tilt things to a net export.

  3. Perk Earl on Tue, 28th Apr 2015 4:10 pm 

    That’s a perfect example of the human experience at work; putting the foot on the accelerator.

    Whenever there is a choice for short term profits or a longer view, the short term always wins. We race a fast as we can to achieve growth and profits, there is no governor (brake) to ease back. It’s no different than an ever faster spaceship on a given (affordable & finite) energy reserve. You don’t want to accelerate past the point of dipping over the top of the graph and beginning the descent. Those opposite directions causing a vortex of destructive proportions.

    That’s why I laugh when seeing an article that explains another acceleration. It’s so crazy you gotta laugh.

  4. Apneaman on Tue, 28th Apr 2015 4:17 pm 

    Yep any day America will be
    “Energy Independent” because it’s a “Shale Revolution” and the “Blitz” is on due to a brand spanking new “technological revolution” in extraction methods. It’s all true because Nony said so because the EIA said so and we all know that Nony only puts his faith in those with a strong track record of 100% accurate predictions. Nony says if you make wrong predictions your wrong about everything and should not be taken seriously – ever. The EIA is nony’s Nostradamus

    EIA cuts recoverable Monterey shale oil estimate by 96 pct

  5. anarky321 on Tue, 28th Apr 2015 4:26 pm 

    this is funny and at the same time very very unfunny because the EIA is basically the government’s take on our energy situation and it is in self denial, or more likely being ‘influenced’ to publish this fantasyland bs…energy independence 2020…vote Obama

  6. Davy on Tue, 28th Apr 2015 5:02 pm 

    Wow, Perk, I love that “vortex of destructive proportions”. I am going to try to fit that somehow into the Davy doom salad rants.

    I was just in Sedona. There are several vortexes there according to the new age’ers.

  7. Makati1 on Tue, 28th Apr 2015 7:10 pm 

    And who is going to buy our gas at twice the price when they can buy it from Russia via, pipeline? More BS from our government propaganda agencies.

  8. dissident on Tue, 28th Apr 2015 8:58 pm

    So why is the USA still importing nearly 2.7 trillion cubic feet of natural gas per year? That is over 76 billion cubic meters per year or about half of what Russia exports to the EU.

  9. Plantagenet on Tue, 28th Apr 2015 9:27 pm 

    The NG export terminals on the US coast are almost completed. Once the US starts exporting NG domestic NG prices should go up as US prices increase to something closer to world NG prices.

  10. Perk Earl on Tue, 28th Apr 2015 9:35 pm 

    “Wow, Perk, I love that “vortex of destructive proportions”. I am going to try to fit that somehow into the Davy doom salad rants.

    I was just in Sedona. There are several vortexes there according to the new age’ers.”

    Thanks, Davy. Definitely good rant material. This stuff keeps getting rehashed all the time, so have to find fancy new ways to regurgitate it.

    Sedona? Great place there to have lunch and look out towards some very interesting looking canyons. We visited just after 9/11 and it was real easy to get around because all the lemmings were scared to go out because of all the govt. sponsored fear monger warnings about national parks. With the Grand Canyon close by to Sedona we had the place to ourselves except for a few stragglers. My wife and I love art so it was great to see all that stuff on display.

    Was it crowded – did you have a good time? Eat out?

    If you’re into new age there is a different psychic energy to every place on Earth. Very heady stuff. My wife has crystals but they just collect dust. It’s not like she holds them and chants – lol!

  11. apneaman on Wed, 29th Apr 2015 1:17 am 

    Exclusive: Oil price crash claims first U.S. LNG project casualty

  12. apneaman on Wed, 29th Apr 2015 1:19 am 

    Collapse of Complex Societies by Dr. Joseph Tainter

  13. rockman on Wed, 29th Apr 2015 2:37 am 

    Plant – “. Once the US starts exporting NG domestic NG prices should go up as US prices increase to something closer to world NG prices.” Exactly. If the US eventually becomes a net NG exporter it’s interesting that some try to spin it as a good thing for the country to be outbid for domestic supplies by foreign buyers. But it will be great news for the oil patch: anything that reduces access to and increases the prices of shale gas will help us greatly. The Rockman et al can only hope the EIA is correct this time.

  14. Nony on Wed, 29th Apr 2015 2:50 am 

    duh. I’ve been pointing this out forever. However, the increase will not be much because of the slope of the supply curve as well as the transportation delta. You can read articles on it. It’s not some conspiracy. That gas belongs to the landowners, not the country.

  15. rockman on Wed, 29th Apr 2015 4:12 am 

    ap – Interesting link…thanks. Here’s an additional perspective:

    “LNG prices are crashing back to Earth, falling in tandem with the collapse in crude. And while LNG may benefit if oil prices rebound, a variety of factors could prevent prices from bouncing back to their highs during the 2011-2014 period.

    First, economic growth in Asia remains unimpressive. The world’s largest LNG importer, Japan, has seen modest economic improvements over the past year, but growth is still weak. South Korea actually imported 9 percent less LNG in 2014 compared to a year earlier.

    Second Japan is moving closer to restarting some of its nuclear reactors. A gradual return to nuclear power will seriously cut into Japan’s LNG demand. Japan’s LNG imports may fall this year.

    Third, a massive volume of LNG export capacity is about to flood the market over the next two to three years. Global export capacity is expected to surge by 34 percent, jumping from 290 million tonnes per annum (mtpa) at the end of 2013 to almost 400 mtpa by 2018. Australia in particular is in the midst of a massive LNG construction phase, with export capacity expected to more than triple over the next 3 years.

    As such, LNG prices may suffer longer than oil prices. LNG prices in Asia may average just $10.30 per million Btu (MMBtu) in 2015, a 38 percent decline from last year. Worse yet, they are not expected to recover anytime soon – analysts at Australia & New Zealand Banking Group Ltd. predict they will average $10 in 2016, half of what they were during the peak years following the Fukushima meltdown. Current contract prices are going for around $12 to $14/MMBtu, but the most recent spot market prices have plummeted to a mere $6.65/MMBtu, the lowest level in almost five years.

  16. shortonoil on Wed, 29th Apr 2015 7:53 am 

    The US now has 487,000 producing gas wells, which are declining at an average rate of 24% per year. To replace the existing wells now declining will cost $550 billion per year. The EIA failed to mention where that money was going to come from?

  17. Nony on Wed, 29th Apr 2015 1:42 pm 

    Annual spending on college is %500 MM per year. And we keep doing it. Big deal. Capital is the cost of doing business in an extractive industry.

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