
After an extended period of low U.S. benchmark Henry Hub natural gas prices, many gas producers would welcome build-out of U.S. LNG export facilities. The global demand for U.S. sourced LNG remains strong, and Henry Hub indexed LNG is very competitive globally. LNG exports are expected to be the largest driver for lower 48 demand growth over the next 5 years. We have demonstrated the capability to execute these projects successfully and quickly. With the first LNG exports in 2016, the US has become one of worlds’ three largest LNG exporters along with Qatar and Australia [1]. Currently there are seven US export facilities in operation, six under construction, and eleven proposed. There is intense competition between developers to bring these proposed liquefaction projects online. Securing long-term 20-year off-take contracts is required prior to the final investment decision (FID) due to the significant amount of capital required. Many European buyers hesitate to lock in multi-decade contracts that developers need to secure project financing. This is because their countries’ goals to meet net-zero by 2050 directly conflict with a secure, affordable supply of LNG feed-gas. Financiers have been encouraged to question the viability of long-term natural gas infrastructure as the industrialized world attempts to rapidly decarbonize. What are the primary challenges that these projects face, and what will it mean to the U.S. natural gas consumers if they all do come online? This TOTM provides a discussion and analysis to the following questions: 1. What is the current and future U.S. LNG Export Capacity? 2. Can U.S. Natural Gas Production support all these LNG projects? 3. How will this additional demand impact Henry Hub pricing in the U.S.? 4. Is there adequate pipeline capacity and expansion projects to ensure the required volumes of feed gas can be delivered when these plants are scheduled to come on-line? 5. What are the challenges of rising project costs because of inflation, higher interest rates, and supply chain constraints? 6. Which projects could potentially be negatively impacted because of the new Department of Energy (DOE) rule change announced April 21 that requires these projects export their first LNG cargo within a 7-year period with limited extension considerations? [Keep reading]