Atlas Eyesight


Liquefied Natural Gas (LNG) Market Development

by Max Stewart

Photo Credit: Bloomberg

Natural gas reserves are scattered throughout the globe and in order to efficiently move natural gas from these reserves, it must be converted into Liquefied Natural Gas or LNG. LNG is natural gas that is reduced to 1/600th of its original volume by cooling the resource to -260 F. Once LNG reaches its destination, a process known as regasification occurs. Regasification is the warming of LNG to return the liquid back into its gaseous state. As soon as LNG returns to natural gas, it can easily be delivered to natural gas customers for heating and power plants for electricity production via pipeline.

The Federal Energy Regulatory Commission (FERC) voted to approve four new LNG terminals based in Texas earlier this week. These new projects would grow the current U.S. LNG export capacity by nearly 100 percent. For these projects to be completed, they would require a long-term commitment from buyers. The natural gas market is currently oversupplied which is making buyers hesitant to enter into these long-term arrangements necessary for developing multibillion-dollar LNG export terminals. Resolution of the U.S. & China trade war should ease concerns and allow buyers to enter into these agreements incentivizing further development of LNG terminals. These recently approved terminals are among another four dozen projects under development in the U.S. To keep up with anticipated development, FERC has added personnel to handle the influx of applications.

Exports of LNG have grown at an aggressive rate, cementing the U.S. as one of the top suppliers of LNG in the world following Qatar and Australia. Furthermore, according to the EIA, 2020 is expected to be the first year since 1953 that the U.S. will be a net exporter of energy products due to this increased LNG push coupled with an increase in domestic crude oil production. Contact an Atlas Energy Advisor to discuss the impact that these fundamental shifts can have on your organization’s long term energy budget and management strategy.

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