LNG exports to Europe up 150%, exports to Asia and Latin America plunge.
By Wolf Richter for WOLF STREET.
US natural gas production rose to a record 39 trillion cubic feet in 2022, according to EIA data, having soared by 33% since 2017 and having doubled since 2006, amid the massive US fracking boom that reshaped the energy landscape in the US globally. By 2008, with limited demand in the US and not enough export possibilities, the price of natural gas in the US collapsed ( for a neck-breaker rollercoaster, see the long-term price chart at the bottom). In 2011, the US became the largest natural gas producer in the world.
The US has exported natural gas via pipelines to Mexico since the late 1990s, and to a lesser extent to Canada (from which is also imports natural gas). And the US has long had a small Liquefied Natural Gas (LNG) export terminal in Alaska.
But large-scale exports of LNG to the rest of the world was impossible until the first large-scale LNG export terminal on the Gulf Coast began operating in 2016. And as the LNG export boom took off, providing more demand for US production, US production skyrocketed:
Exports of natural gas.
Total exports of natural gas via LNG to the rest of the world, and via pipelines to Mexico and Canada rose to a new record of 6.89 trillion cubic feet, or roughly 18% of US production.
Exports via LNG rose by 3.6% in 2022 to 3.87 trillion cubic feet, up from near-0 in 2015. Exports were handicapped by the shutdown of the Freeport natural gas liquefaction plant in Texas last June, after a major fire, which cut LNG export capacity by 17% for the second half of the year. Exports did not resume until this year.
Exports via pipeline to Mexico took off over 20 years ago and in 2021 reached a record of 2.15 trillion cubic feet, but dipped to 2.07 trillion cubic feet in 2022 (the US imports no natural gas from Mexico).
Exports to Canada via pipeline have remained relatively stable over the years, and in 2022 rose to 952 billion cubic feet, but that was below the 2019 volume (the US imports more natural gas from Canada than it exports to Canada).
In the chart, you can see the slower growth in LNG exports (purple line) in 2022 due the shutdown of the Freeport LNG export terminal. The green line represents exports via pipeline to Mexico and Canada. The red line is total natural gas exports:
LNG Exports by region and country.
Asia had been the dominant buyers of US LNG, at first Japan and South Korea. China and India also became big buyers starting in 2020. In 2021, exports of LNG to Asia reached a record 1.68 trillion cubic feet, nearly half of total LNG exports, according to EIA data. But in 2022, sales to Asia plunged by 46% (green line), as US LNG was diverted to Europe.
European countries with LNG import terminals became large buyers of US LNG. Combined, they bought 2.47 trillion cubic feet in 2022, about 64% of total US LNG exports (red).
Even though Germany ended up with some of the gas through the European gas distribution network, it didn’t have LNG import terminals until the very end of the year, and so it doesn’t show up as a major buyer.
The buyers in Europe were coastal countries with LNG import terminals and with chartered Floating Storage and Regasification Units (FSRU). The largest buyers in Europe were, in billion cubic feet (Bcf)
- France: 571 Bcf
- United Kingdom: 464 Bcf
- Spain: 426 Bcf
- Netherlands: 378 Bcf
- Poland: 127 Bcf
- Italy: 116 Bcf
- Belgium: 80 Bcf
Exports to Latin America plunged by 60% in 2022, to 245 billion cubic feet (gray).
Exports to the Middle East and Africa rose to 249 billion cubic feet (blue).
For your amusement: The price of US natural gas.
Today, the price of natural gas futures edged over $3 per million Btu for the first time since January, after having dropped as low as $2.20 in February, after having spiked to nearly $10 in the summer of 2022.
Note the much higher prices that prevailed before 2008, before fracking unleashed the biggest and fastest supply surge ever, upon which the price collapsed, pushing many dozens of smaller shale oil and gas drillers into bankruptcy, plus some big ones, including finally Chesapeake Energy in 2020, which marked the end of the Great American Oil and Gas Bust and the beginning of the recovery:
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3$/ per million cubic feet why are my gas bills so high,it’s mostly bullsh*t fees to support overpaid executives. We used to have 3 vp now .11 vp total nonsense for a publicly owned utility
You beat me to it. I’m pretty sure I read an article somewhere that San Diego’s nat gas is the most expensive in the county, or the electric or both. They charge what they can because they can. I guess when they steal my gas stove my gas bill will go down, though.
If we continue to take out so much gas (that too forcibly) from the earth, what would happen to earth over time? Perhaps we will start thinking about it after it is too late (like the use of fossil fuels)
Has already caused issues around the world with the highlighted example Netherlands giant Groningen field.
Earthquakes thought small some damage to homes and subsidence for potential flooding . Easy fix of course is just extract CO2 from the air and reinfect once they quit production and bring pressure back up.
Wonder how many environmental issues over the centuries have negatively impacted some humans while the human race as a whole benefitted. Eminent domain is a classic example.
But the weather….
Drilling for oil and natural gas in California is being regulated out of existence and most of the gas burned in California is piped in from east of the Rocky Mountains. So basically supply and demand determines the price. It’s really that simple.
In a portfolio of assets in the oil and gas production capable areas, the production decision is generally based on the marginal cost of production versus the market price, the marginal revenue.
California may currently be a high marginal cost asset and therefore be “shut in”. At some point in the future it may become necessary for the shut in supply can be reactivated in response an excessive price.
I am instantly skeptical when someone blurts out a “fight song” they have been taught, like ” regulated out of existence” .
Had you read the article, the US natural gas production and export are setting records. Not exactly supportive of your fear.
It’s both, The Bob. Up to $0.60/kwh now, and I think gas was almost $5.50/therm last month. INSANE.
But, you know, it’s because BIDEN SHUT DOWN THE FOSSIL FUEL INDUSTRY. At least that’s what I hear the right wing say every day.
If only one could harness all of the hot air coming out of the White House we’d be energy independent. And the best part is it would be perpetual, no matter which party is in there there’s lots of hot air.
$3 per million “B.T.U.” not million Cu.Ft….
VRY gud point nefff:
Lots of confusion over the very different ”measures” of NG as well as LNG in my long experience buying both NG and ”propane” as another equally confusing example.
Maybe our Wolfster will explain with his usual vry clear graphs exactly what is the difference.
After that explanation, all WE the PEONs can hope is that ALL relevant data will be promulgated in the same,,, EXACTLY THE SAME measurements,,,
I believe that all states of CH4, methane, are normalized with the STP, standard temperature and pressure of methane in the gaseous state.
The base rate for nat gas piped into my home as of my January bill from CenterPoint Energy was $0.91 per 100 cubic feet.
Based on the little gas I burn, my bill should be a nickel. It’s way way more than that.
All utilities have a minimum monthly charge for NG and that includes the meter.
Comon, read what was written:
“natural gas *futures* edged over $3 per million *Btu*”
Remember the huge concern around “peak oil” a couple of decades age? While “peak gas” is nowhere in sight, the question arises: “Why should the USA sell its energy supply to the rest of the world?” The profit motive is insufficient….the gas we control may be our only source of cheap energy in the future. AMERICA FIRST! The rest of the world can struggle along without USA gas which will likely be a valuable bargaining chip in the long term future.
Why NG export limits ? Why not all exports for anything? Maybe Texas should ban all exports to rest of USA. Bans on free enterprise? Hundreds of billions if not trillion dollars of benefit from growing exports of NG . Government and green house folks want the industry to be eliminated. Any ban on exports long term would drive price higher and restrict competition. Fewer operators fewer plants and pipelines for transport where the future gas is located. Maybe we should have banned cars and larger houses in the 50s – 60s so we would not have used up all our cheap oil reserves . If that had happened today frac would maybe not have been developed with additional regulations. Sound regulation to protect correlative rights and stop direct pollution which is in place already but many gas pipelines are blocked from west Texas gas which sells at a negative many times this last couple of years .
According to Wolf, US nat gas exported fetched about 60 billion in 2022, the year of record prices. The traders The revenue from exports is overestimated, as the value of ‘gas weapon’.
Russia was selling its gas to Europe for decades, most recently it earned 25 to 40 billion depending on the price, less what Australia did on LNG exports half in volume. It looks like such exports benefit the importing countries more than exporters.
LNG is very expensive, a lot of energy is needed to turn NG into a liquid and to maintain it as a liquid during transport on specialized vessels.
re “Why should the USA sell its energy supply to the rest of the world?”
the red states tell me it is the same reason why the USA exports much/most of its coal b/c it has an over 50-100 year supply at US domestic consumption rates, and fossil fuels era is going to end w/in the next 50 years, so makes no sense to keep it in the ground.
both ”coal” and ”oil” should be preserved for the various and sundry products manufactured from them NOW,,, and likely to be the only source for manufacture of many many products going forward at least for the next hundred years.
After that, surely we can go beyond any particular input to produce the protheses and other ”parts” needed.
Until we have the results of HUGE investments in ”theoretical physics” and the following engineering to ‘harvest’ all the energy needed FOR EVA,,, we will need to have these GAIA given substances for our health,,,
NOT for ”fuel”…
Hard to imagine, far damn shore,,, but WE,,, in this cae the entire species WE need to understand that WE will be absolutely dependent on the prostheses now and for a long time dependent on sources of coal and other fuels.
NOT any fan of ANY fuel consumed for transportation or other ”consumption” reasons, far damn shore, as it is SO clear that those needs can and should be from renewables…
The US is already keeping most of it’s energy surplus in the form of flaring, people driving mega-sized SUVs and both the corporate and public sector operating very energy-inefficient systems. Some of that extra energy is of course transformed into GDP with marginal utility, but most of it is just used as a luxury amenity. Cheap resources are extremely poisonous to economies in the long run – the Romans had abundance, while the Barbarians were raised in scarcity.
Just like Adam Smith considered the conundrum of the wisdom of trading as opposed to the alternative of producing every single item that may be needed.
He even attempted to quantify his observations about the wool market in Great Britain and other countries that were accessible by wind driven, ocean going vessels. Similar to today’s semiconductor industry.
The thing about the whole ” Adam Smith and the invisible hand of the free market ” is that is not what he said. He warned against free trade established by the merchant class as an economic exploitation of the middle class and a harmful disruption of the community. In his notes to his opus, “the Wealth of Nations”, can be found the nuggets like never elect a merchant to decide policy. The country producers are unsophisticated and no match for subsidized enterprises that were concentrating ownership toward the ultimate goal of the profit end zone, monopoly.
They may just be capable of disappointing they’re mothers.
Applying my AI app, I recall what was going on 50 years ago when we were in the same inflationary spiral as today. Partially associated with the war levels of spending on the military but principally the inappropriate activities by Federal Reserve Bank of the United States of America.
Of course how can we forget the role of the Fed’s largess in the rockin and rolling, roaring 20s that ended with the beginning of the Great Depression which commonly is assumed to have begun on October 29th. Black Friday, 1929.
How could they possibly so consistently wrong to the point they slept through
How could an agency, the Fed who claims to be slavishly devoted to joe six pack, be so destructive of the same cohort through their absurd policies.
Cover the losses of the losers, the criminal banks and the geniuses in the Ivy league who deigned the absurd policies that failed, catastrophically.
Look at the baby steps they are taking, far below where, IMO, they need to be to snuff out inflation.
The longer the inevitable collapse in asset prices is put off should not be a concern of the monetary authority.
so consistently wrong in a manner that was designed to transfer wealth upwards from the poor to the wealthy. ZIRP and the tools QE and the expansion of the balance sheet to an absurd level.
An idiot arose from the ever present societal conflict, one Ben Bernanke, willing to tow the line and develop an economics constructed on the illegalities being accepted if they were in common practice.
Anyway, we are in a world in which that tactic has failed. The longer they hold off is proof that they are dedicated to the gamblers trying to lay off the risk on young people.
Nat gas. The investment widow maker.
Career widow maker!! In the 1970s we were out of NG !
Yes but if u play the infrastructure and royalties u do well
Heck I’m getting a 13% yield for last 2 years
Our electric provider just proposed 17% rate increases on all power bills here in NC. All due to the cost of burning Natural Gas. I don’t see why they did not just bank it when prices were low.
This will be a permanent increase, meaning they may profit when prices go lower on NG. Not to mention the soon solar upgrades (which I’m for) will raise the prices another 15% if not more.
Then there is talk of putting wind turbines (not as cool as Dune’s) off the coast. But never any talk of lowering bills due to savings. Nope
And PS, if Texas is the fracking capital, how in the world can their energy rates be ridiculously expensive sometimes?
Why not run NG plants off the local frack?
Texas has deregulated electricity production with the utility and coops providing transport or direct sales . The price swings are a result of the price spikes seen in the curve from Wolf. Texas is a big place also and has large electric grids . The Texas RRC regulates the transport . Texas has also become the number one wind power producer ( I have no idea why but I’m sure it’s a subsidy or regulatory or Fed mandate. Nuclear plant was shut down and not finished which cost billions. Lignite plants are being mothballed as well early. No one said politicians were smart. Just lots of lawyers and lots of lobbies that have lawyers and the lawyer lobbyists write the bills !
My 3 year fixed contract including the fixed grid fee was 0.08 usd per kw and my newest 3 year signed in Jan 2023 is 0.12 usd /kw
The grid fee is 0.04/kw
From 2013 til 2020 I had 0.05usd/kw
My ebill (services) just went up 50 percent !!!
The reason primarily is the long term contracts for base wind power
“My 3 year fixed contract including the fixed grid fee was 0.08 usd per kw and my newest 3 year signed in Jan 2023 is 0.12 usd /kw
The grid fee is 0.04/kw
From 2013 til 2020 I had 0.05usd/kw
My ebill (services) just went up 50 percent !!!”
Hilarious! You’re basically getting energy for free.
We’re the #1 wind power producer because we have lots of wind and lots of wide open spaces to put wind turbines. These make economic sense, which is why they are being built in large numbers.
Lignite plants are also being shut down for the same reason. Less expensive natural gas makes them obsolete from an economic perspective. Lignite is the dirtiest and least efficient type of coal, too, so there’s an additional benefit to shutting down these plants.
Sorry to disappoint you, but there’s no conspiracy. Between wind power and comparatively inexpensive natural gas, no one in their right mind would build a coal plant in Texas now.
Don’t get me wrong, I love Texans but it was a couple of times over the past 70 years difficult to endure being lambasted by their compulsion to immediately convince me of what stand up guys they were, even if they weren’t.
The insinuation that Texas has allowed itself to become a captured industrial …… seems obvious from a casual evaluation of their infrastructure, which is abysmal, not to disturb the culture of oversized ego’s.
I live with the burden that man, of which I am a member, doesn’t make a pimple on a well diggers ass to nature. If we kill our self well nature will continue, unaware that a species became extinct
Yeah Texans were getting blasted with thousands in energy bills a couple cold snaps ago.
“Our energy grid is cold proof!”
And then the whole grid crapped the bed. Lol
Not to mention half the buildings had frozen pipes. (Or a lot of them). Wonder what that final insurance bill was?
And how many people were just plain screwed to “Wild West” standards of consumer protection. which a tin can shot with holes has about the same protections. Hehe
Does a wind turbine even pay for itself in its lifetime,I doubt it but buffett duetting 1 billion a year in subsides from taxpayer.Great investment.by the way Im a shareholder
Yes, it does. Just ask the right-winger ranchers and farmers in West Texas, Iowa, and Oklahoma that installed them on their farms and ranches because now they can make money off something they have in endless supply and that is free: wind. For them, it was the biggest no-brainer in the history of mankind. They understand business and money.
The four biggest wind-power production states are Texas, Iowa, Oklahoma, and Kansas. These people and their state governments aren’t exactly lefties, LOL.
Every form of energy is getting subsidies, and no form of energy gets more subsidies than nuclear. Complain about nuclear first! If you’re worried about subsidies, that should be your #1 priority.
Nuclear nameplate capacity vs. windmill nameplate capacity. You ought to know how it works out over a 365-day timeframe on that basis.
And now with mini-nuclear or SMRs emerging, building those will need far fewer subsidies in the early 2030s. And they can operate at nameplate capacity on demand, unlike wind or solar.
You cannot operate a power grid off wind and/or solar. Both need backup systems, and we now are seeing those backup systems being in multiple forms, NG plants, and [very expensive] battery back-up.
I’m so tired of this shit.
1. I said: “The four biggest wind-power production states are Texas, Iowa, Oklahoma, and Kansas.”
THAT’S ACTUAL ELECTRICTY GENERATION AND SALES, NOT CAPACITY.
2. Go take your nuclear trolling somewhere else. You’re too young (?) to have heard all the lies the nuclear industry told me entire life. Or maybe you’re just another nuclear industry troll.
3. Here is power production in the US, electricity generated and sold (not capacity). You ought to know this.
I’m sure the US has been selling cheap NG to Mexico to support all the US manufacturing down there. They sure don’t need it for heating.
LNG exports have ramped up to support Germany and other European users after they cut off their nose to spite their face with Russia. This will very likely mean somewhat higher prices long term for the US. But what the heck, a small price to pay for dollar hegemony….if it works.
LNG is a really stupid, but I guess necessary way to use NG. Some estimates put greenhouse gas emissions emitted from the LNG process (e.g., liquefication, shipping, back to gas form) ats about the same as burning the gas itself. This puts LNG roughly on par with other fossil fuels for greenhouse gas creation.
Mexico uses the natural gas largely for power generation so that they don’t have to burn their crude oil for power generation and can export it instead (including to the US) and make more money.
You would be surprised at how cold the temp gets in higher elevations of Mexico. But most Mexicans cannot afford to heat their homes.
Americans don’t realize that a large chunk of Mexico (especially Northern 50%) is a large, higher altitude plateau. The Mexico of American imagination are the coastal strips that run along each side of the huge plateau.
Petroleum reservoirs may also contain natural gas, condensates, ethane, propane and butane in solution. Ethane is used to make plastics as in polyethylene, then used to make synthetic fibers for clothes.
Saudi Arabia and Argentina have the potential to become LNG exporters, as does Canada.
Not that correlation necessarily means any causation here, but it looked interesting how the 2005 and 2008 spikes and subsequent collapses in NG futures took place right before real estate crash #1, and now we see another collapse in price while we’re now on the cusp of real estate crash #2.
It’s just my tendency to look for exciting patterns, even if nothing more than coincidences.
Different now, lng tankers are booked solid thru 2027, as my grandfather would say when he owned refinery and engineer for Arco, buy oil and Ng when u see lowest ever, it will make u rich
All that talk about how Europe was going to freeze from being cutoff from Russian NG. Or was that just another mainstream media lie amongst well…everything they say. And the bonus is alienating Asia at the same time you’re increasing profitability. and bringing Russia & all of Asia closer. Brilliant!
With la Nina gone, winter will last longer,I see another spike to double digits coming
Next year is when Europe will be tested
Viva El Niño!
No that was not a mainstream media lie.
Europe got an extremely soft winter to the point that during some weeks the reserves could be filled instead of used.
I’m going to use Germany as an example since they are/were the nation most dependent on Russian gas and due to the size of the economy pushes that problem onto the rest of Europe (for example the Netherlands is a net exporter but due to the suppliers selling to Germany due to profits instead of the Dutch companies that resell gas and/or produce electricity for the Dutch market prices there end up just as high).
Based on a normal winter and no attempts at energy saving Germany would have ended up with rolling blackouts at the end of February or the first weeks of march. A strong winter would have gotten Germany to that point at the end of January.
I need to point out that Germany had a target of 20% energy use reduction compared to the average, in several weeks they almost got that. The only reason they almost got that was the soft weather, the weeks that it was winter as normal the reduction in energy use was closer to 5%.
The biggest elephant in the room is that the reserves at which Europe exits this winter will have a major impact on the winter period starting in November/December 2023. Germany (again) needs to exit this winter with at least 40% of the reserves remaining at the end of March to be guarantee that they can get to the minimum reserve percentage set (At EU level) to enter the winter season.
It will also give the EU time to move supply lines away from Russia but that will be a process that will only make a significant difference in 2024, this year (2023) it will be just enough to keep the reserves for this winter from getting to empty if there is a normal winter, so another price spike can happen based on longer term forecasts of the severity of the winter in Europe.
While all of the above is true, demand destruction is also wreacking havoc. Italian, German and BeNeLux households are paying massive premiums to change their heating system from natural gas to heatpump. Fertilizer and chemical manufacturers are moving their production from Europe to Africa, Asia and the Middle-East. Solar panels are piling up in European ports because they are odering so many that there is a shortage in installers and power electronics, while dozens of long forgotten pumped hydro projects are being resurrected. None of these are instant changes, but listening to qatari exporters they truly seem to be concerned about loosing part of the demand forever.
The EU countries subsidized energy in 2022 to the tune of over $800B USD… without this massive expenditure at the government level, it would have been a rough year for the average person and company’s utility bill.
Of course, the government’s money is the private sector’s money, so net net, they will feel the effects in other ways, just not directly in their energy bills.
Now what to expect? Gas producers are businesses. At such a low price it makes no sense to record produce. So we go the other way and production slows. Then prices go back to a little over breakeven. The futures contracts have contango. So what to do? Any good ideas ?
At lot of their production is hedged at higher prices. Shale driller excel in creating gluts that destroy said share drillers. We’ve seen that over and over again. They know how to do that, as long as investors are paying for it (the oldest rule in the oil field is, “never drill with your own money.”)
Natural gas is a byproduct in most basins these days, so aside from the Haynesville it seems unlikely to see much activity change as long as oil is in the $70s.
They are already shutting in wells and reducing rigs
Both oil and gas are cheap right now
Microsoft is valued more than most of energy names combined
High prices are a cure for High Prices.
Recall the computer chip situation?
Large global increases in LNG demand have finally coupled to previously isolated US NG pricing.
Happy for all the gas workers in a growth industry.
And then I see my bill…block these LNG terminals NOW they are a menace!!
Anywho, the irony that Joe Biden gave a massive lift to domestic oil and gas production by donating military hand me downs is hilarious.
“The buyers in Europe…”
How dare you!
Sorry folks, but you’ll have to pry my gas stove out of my cold, dead hands in Flyover.