Page 4 - NorthAmOil Week 02 2023

NorthAmOil COMMENTARY NorthAmOil

US LNG capacity forecast to almost

double over next 10 years

US LNG capacity is likely to nearly double over the next 10 years, according to a new

research note from Moody’s

US US LNG capacity is likely to nearly double over win permitting approvals from the US Federal
the next 10 years, boosting medium-term mid- Energy Regulatory Commission (FERC), and
WHAT: stream growth opportunities, a new research will likely have to overcome court challenges
Moody’s is predicting note by Moody’s has said . The firm believes that from opponents.
that US LNG capacity is this will be the case even if some of the currently Today’s US peak nameplate capacity of nearly
likely to nearly double in proposed projects do not reach completion. 14bn cubic feet (396.4mn cubic metres) per day
the next 10 years. This will boost medium-term midstream reflects only about one-quarter of the capacity
growth opportunities, said Moody’s. of all announced LNG projects, of which there
WHY: are several major ones due online in the mid-
Rising global demand for Growth opportunity 2020s, including several with partial or full
gas amid Europe’s energy Rising global demand for natural gas has given FERC approval. Around 10 bcf (283 mcm) per
crisis presents a growth US producers of LNG a “significant growth day of capacity is under construction.
opportunity. opportunity”. But delivering on this opportu- The Appalachia region’s Marcellus and Utica
nity will depend upon the timely construction shale plays together contribute roughly one-
WHAT NEXT: of natural gas pipeline infrastructure to support third of US dry gas production, but there is lim-
The energy transition will new US LNG supplies, and upon the continued ited takeaway capacity, which has constrained
continue to represent a availability of long-term offtake commitments growth for those regions. Much of the feed gas
major challenge. to back financing for LNG infrastructure, said for the US’ existing LNG terminals comes from
the report. associated gas produced in the Permian Basin,
Europe’s energy crisis is expected to keep the as well as dry gas from the relatively nearby
LNG market tight until 2025-26, supporting Haynesville play in Louisiana.
cash flow generation for US LNG producers. In the fourth quarter of 2022, US dry gas
Most of the announced US LNG projects up production stood at 100 bcf (2.83 bcm) per
until 2025-26 have long-term commitments day, exceeding output levels from a year earlier
from Asian buyers, the report noted, which by 3%, largely owing to increased drilling and
originally drove the US LNG export boom pipeline expansions in the Haynesville and ris-
since the mid-2010s. International commodity ing volumes of associated gas delivered by oil
traders have stepped up their LNG purchases in producers in the Permian Basin, said the note.
2022. The completion of two-thirds of the LNG
But LNG producers require long-term offtake capacity now under construction and 25-50% of
commitments to underpin financing of new FERC-approved LNG projects would translate
LNG infrastructure projects. LNG projects to an additional 10-15 bcf (283-425 mcm) per
should in turn spur further capital allocation for day flowing to US LNG facilities, said Moody’s.
constructing new pipeline capacity to connect New LNG projects anticipated to enter ser-
the largest US gas-producing regions and new vice in 2025-26 and beyond must demonstrate
export facilities. access to long-term gas supplies, warned the
These new pipeline projects will need to firm.

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