Despite the temporary impact of the Biden administration’s permit pause, liquefied natural gas continues to be a key growth area for companies worldwide.
“LNG supply could double by 2030, led by new projects from the USA and Qatar,” said Mark Bononi, principal analyst, global gas and LNG asset research at Wood Mackenzie.
In 2023, global LNG trade totaled 401 million tons, a 2.1-percent increase over 2022 – a smaller growth rate than the 5.6-percent rise between 2021 and 2022, but a gain nonetheless. And more countries are entering the fray. Forty-eight countries and regions imported LNG in 2023, up from 44 in 2022: Germany, the Philippines, Vietnam and Hong Kong joined the group. According to the Energy Information Administration, the number of LNG-importing countries and regions will reach 55 by the end of 2024.
The United States became the world’s largest LNG supplier in 2023, exporting 84.5 million tons of LNG to Europe, Asia and South America and surpassing Australia (80 million tons) and Qatar (78 million tons). Last year, the United States’ LNG supply increased 12-percent year-over-year, accounting for 21-percent of the global total. Many forecasts predict the United States will continue to lead the world in LNG exports for the foreseeable future.
The EIA has stated that ten liquefaction projects currently under construction will come onstream before 2028. These projects will add 64-million-tons-per-year capacity, led by two large projects in Texas and one in Louisiana. The Texas projects include three trains from Golden Pass LNG, a 30/70 joint venture between ExxonMobil and Qatar Energy, and three trains from the Rio Grande LNG project in Port Arthur with 16.2-million-tons-per-year capacity, led by NextDecade. The Plaquemines LNG project south of New Orleans, La. uses 36 smaller trains in two phases with 19.8-million-tons-per-year capacity.
In addition, there are ten LNG projects with 45 million-tons-per-year capacity that have been approved but not yet taken final investment decisions. These include four in Louisiana, three in Texas, one in Mississippi, one in Alaska, and one floating LNG project in the Gulf of Mexico.
If these ten projects can reach final investment decisions, the United States will achieve nearly 200-million-tons-per-year liquefaction capacity within the next decade, greatly extending America’s lead as the No. 1 global LNG supplier.
“Not all projects will be realized,” cautioned Bononi. However, even if some of these pre-FID projects do not get built, the United States will most likely continue as the global LNG export leader. Its biggest rival, Qatar, plans to expand from 77 to 142-million-tons-per-year capacity by 2030.
Growth Factors
Several factors could impact how much the United States is able to continue growing as a supplier. Principal among them is policy certainty and continuity. LNG supporters argue that gas and LNG represent key transitional fuels, as gas-powered plants emit half the carbon dioxide of coal-powered plants. Opponents believe gas is no better than coal, arguing that leakage throughout the valuation emits significant methane, a more potent greenhouse gas.
The country also awaits a final ruling regarding the LNG permit pause. Louisiana federal judge James Cain ruled against the government’s ability to enact this pause in response to a lawsuit from 16 Republican-led states.
According to Wood Mackenzie, the pause will not have a significant impact on United States’ LNG export capacity before 2028, but Wood Mackenzie acknowledges that close to 80 million-tons-per-year worth of LNG projects need non-FTA approval, and 85 million-tons-per-year worth of projects require extensions, prior to 2027. Theoretically, extensions are not impacted by the pause and can be processed on a case-by-case basis. But “wheels grind especially slowly during an election year,” said Bononi.
LNG projects are also long-term and capital intensive. Financial backing and offtake agreements must be secured before developers can make a final investment decision to start construction. From FID to completion, LNG plant construction typically takes three to five years.
Demand for U.S. LNG exports will continue rising, as international companies continue to try to grow in the U.S. LNG industry (See sidebar). China is the world’s biggest LNG importer, taking in 72 million tons in 2023. Japan, whose demand decreased by 7 million tons to 66 million tons last year, is second.
In 2023, China imported only 3 million tons of LNG from the United States, or 4-percent of its annual total. Will China import more LNG from the United States to help reduce trade imbalance between the world’s two largest economies? Will Chinese companies join other international players to sign more long-term offtake agreements or even take equity in LNG projects? Time will tell, though for now a closer LNG partnership between American and Chinese companies does not seem promising.
Even when factoring in these unknowns, the LNG industry is set to grow significantly in the United States for years, and perhaps, decades – especially if methane leakage can be reduced significantly.