Editorial comment

The ongoing development of shale gas resources in the US has spurred infrastructure construction for both natural gas processing capacity and LNG export terminals. New gas processing projects include the construction of multiple cryogenic and gas processing plants, NGL fractionators and multibillion-dollar pipeline infrastructure.

This abundance of natural gas has fueled an unprecedented surge in the construction of new LNG export capacity. In total, the US has announced more than 36 LNG export terminal projects. These projects represent more than 330 MMtpy of LNG export capacity at an investment of more than $200 B by 2030. Nearly 80% of the nation’s LNG export capacity projects are located along the US Gulf Coast.

Due to the global oversupply of LNG, it is highly unlikely that the majority of these projects will be completed. Regardless, the US is expected to become one of the largest LNG-exporting nations by 2020. By the early 2020s, the country will challenge Australia and Qatar to become the largest LNG exporter in the world. The US is scheduled to start operations on approximately 71 MMtpy of LNG export capacity by 2020 (Table 1). These projects constitute total CAPEX of approximately $50 B.

 

A second wave of US LNG export capacity could contribute an additional capacity of 30 MMtpy. These projects include LNG trains at Sabine Pass, Corpus Christi, Cameron and Freeport. Multiple LNG export projects are also expected to be built. It is imperative that these projects secure LNG offtake agreements to reach final investment decisions.

Nearly all of the US LNG projects under construction have secured customers for their LNG capacity. US LNG export volumes will vary in response to global demand and the difference between domestic and global natural gas prices. At present, LNG is traded under oil price-linked contracts. However, as the LNG market expands, contracts are expected to change, weakening their ties to oil prices.

As global LNG trade is forecast to increase substantially over the next 15 yr, so is the amount of LNG export capacity. The projects that secure offtake contracts quickly will be in better shape to obtain financing and build their facilities. Regardless, the US is quickly becoming one of the leading nations in the LNG industry. GP