EIA forecast in the August STEO that U.S. LNG exports will average 10.0 Bcf/d in 3Q22 and 11.2 Bcf/d for all of 2022, a 14% increase from 2021. The agency cited additional U.S. LNG export capacity that has come online and Freeport LNG resuming operations sooner than initially expected. Even before the invasion of Ukraine by Russia since the end of 2021, the EU and the UK imported record-high LNG volumes because of low natural gas inventories. Europe has become the main destination for U.S. LNG exports and accounted for 74% of total U.S. LNG exports during the first four months of 2022.
Henry Hub Price Forecast
- In July, the Henry Hub spot price averaged $7.28 per million British thermal units (MMBtu), down from $7.70/MMBtu in June and $8.14/MMBtu in May. Average natural gas prices fell over the last two months primarily because of additional supply in the domestic market following the shutdown of the Freeport LNG export terminal on June 8.
- However, prices increased by almost 50%, from $5.73/MMBtu on July 1 to $8.37/MMBtu on July 29, because of continued high demand for natural gas from the electric power sector. EIA expect the Henry Hub price to average $7.54/MMBtu in the second half of 2022 and then fall to an average of $5.10/MMBtu in 2023 amid rising natural gas production.
In the first half of 2022, the United States became the largest LNG exporter in the world. EIA forecast LNG exports will average 12.7 Bcf/d in 2023. Expected growth in LNG exports in 2023 results from LNG export terminals that came online in mid-2022 being operational for the whole year in 2023.
- U.S. natural gas inventories ended July at 2.5 trillion cubic feet (Tcf), which was 12% below the 2017–2021 average. EIA forecast that natural gas inventories will end the 2022 injection season (end of October) at close to 3.5 Tcf, which would be 6% below the five-year average.
- EIA forecast U.S. LNG exports will average 10.0 Bcf/d in 3Q22 and 11.2 Bcf/d for all of 2022, a 14% increase from 2021. This increase is the result of additional U.S. LNG export capacity that has come online and Freeport LNG resuming operations sooner than we had initially expected.
- High exports are being supported by high international LNG prices, as well as by additional export capacity created by a new U.S. LNG export facility, Calcasieu Pass LNG, which continues to ramp up exports.
- In the first half of 2022, the United States became the largest LNG exporter in the world.
- EIA forecast LNG exports will average 12.7 Bcf/d in 2023.
- EIA forecast U.S. consumption of natural gas averages 85.2 Bcf/d in 2022, up 3% from 2021.
- Consumption in the electric power sector continues to increase as a result of limited switching from natural gas-fired generators to coal-fired generators for power generation, despite elevated natural gas prices.
- In addition, rising U.S. natural gas consumption reflects increased consumption in the residential and commercial sectors as a result of colder temperatures on average in 2022 than in 2021.
- EIA forecast that natural gas consumption will average 83.8 Bcf/d in 2023, about 1.3 Bcf/d (2%) lower than in 2022.
- EIA forecast U.S. dry natural gas production to average 97.1 Bcf/d in August and 96.6 Bcf/d during all of 2022, which would be 3.0 Bcf/d (3%) more than in 2021. EIA expect dry natural gas production to average 100.0 Bcf/d in 2023.
The August Short-Term Energy Outlook (STEO) is subject to heightened uncertainty resulting from Russia’s full-scale invasion of Ukraine, how sanctions affect Russia’s oil production, the production decisions of OPEC+, the rate at which U.S. oil and natural gas production rises, and other contributing factors. Less robust economic activity in our forecast could result in lower-than-forecast energy consumption.
Calcasieu Pass, seventh U.S. liquefied natural gas export terminal began production
On March 1, Calcasieu Pass loaded and shipped its first LNG cargo, often called a commissioning cargo, aboard the tanker Yiannis, chartered by JERA Global Markets, which delivered the LNG to ports in the Netherlands and France. Calcasieu Pass loaded its first cargo 30 months after its final investment decision, which was the shortest amount of time of all the LNG export projects in the United States. As of April 27, Calcasieu Pass has shipped nine cargoes, according to Bloomberg Finance, L.P.
The EIA in Today in Energy on Calcasieu Pass liquefied natural gas:
The Federal Energy Regulatory Commission (FERC) has authorized Venture Global Calcasieu Pass, LLC, (Venture Global)—the developer of the Calcasieu Pass liquefied natural gas (LNG) export terminal—to commission the first six of nine liquefaction blocks. Each block contains two liquefaction systems called trains. The first authorization, issued in November 2021, was one of the initial steps toward full commercial service.
Calcasieu Pass is a 1.3 billion cubic feet per day (Bcf/d) liquefaction facility located in Cameron Parish, Louisiana. Similar to nearby LNG terminals Sabine Pass and Cameron, Calcasieu Pass will export LNG through the Calcasieu Ship Channel located on the Gulf of Mexico. Calcasieu Pass is the seventh U.S. LNG liquefaction export facility to begin producing LNG since 2016.
In addition to 18 mid-scale liquefaction trains, the Calcasieu Pass facility includes an onsite natural gas-fired plant to generate electricity for the facility’s operations, three pre-treatment trains, two LNG storage tanks (with a capacity of 4.4 Bcf each), and two shipping berths capable of loading LNG vessels with carrying capacities of up to 185,000 cubic meters (4 Bcf). The Calcasieu Pass terminal receives its feedgas through Venture Global’s 24-mile, 42-inch diameter TransCameron Pipeline, which has interconnections with the ANR, TETCO, and Bridgeline pipelines.
Since November 2021, Venture Global has received FERC approval to commission Blocks 2–6, most recently on March 30, 2022. Natural gas deliveries to the terminal have increased throughout 2022, averaging approximately 0.7 Bcf/d in April, according to PointLogic. With only three blocks left to authorize for commissioning and given the pace at which the terminal has received FERC approvals to commission blocks, Calcasieu Pass could reach its full LNG production capacity of 1.3 Bcf/d baseload (1.6 Bcf/d peak) by the third quarter of this year.
From The TradersCommunity Desk