SHREVEPORT, La.—U.S. LNG exports are key to balancing the U.S. natural gas market, according to Bernadette Johnson, vice president, market intelligence, for Drillinginfo Inc.

“Natural gas production continues to reach record levels,” she told attendees at Hart Energy’s recently held DUG Haynesville conference and exhibition. Dry-gas production through year-end 2018 was 24.6 Bcf/d more than in 2010, according to Drillinginfo data.

The U.S. Energy Information Administration (EIA) reported that November 2018 alone was the 19th consecutive month of dry-gas production year-over-year increases. The November total was more than 88 billion cubic feet per day (Bcf/d), up some 9 Bcf from the November 2017 daily output.

Yet, DI’s Johnson noted in Shreveport, “storage inventories remained at historical lows throughout summer 2018.”

Working gas in storage entering withdrawal season Nov. 1 totaled 3.2 trillion cubic feet (Tcf), 15.3% lower, year over year, according to the EIA.

Johnson said, “Demand for natural gas in the U.S. is increasing significantly. Some of it is domestic (consumption), but the biggest piece is LNG exports.”

Growth in exports to Mexico has been meaningful, “but it’s not like LNG.”

Drillinginfo is expecting 11 Bcf/d of U.S. LNG exports by 2023, an estimate Johnson said “is conservative” based on what LNG developers forecast. “Ours is based on the market. How big is the market out there?

“The global LNG market that moves around on ships is a 40 Bcf/d market. It’s less than half the size of the U.S. (domestic market),” she said. “So can we grow to 11 (Bcf)? We think so. Can we grow much more than that? That’s pretty tricky. How are you going to replace or add more than 25% of the existing market? This is the challenge.”

The EIA forecast for LNG exports at year-end 2019 is 8.9 Bcf/d (with year-end 2018 estimated at 3.6 Bcf/d) as new trains come online at Elba Island, Ga. (Kinder Morgan Inc.); Freeport (Freeport LNG Development LLC) and Corpus Christi (Cheniere Energy Inc.), Texas; and Hackberry, La. (Cameron LNG LLC).

Drillinginfo estimates 2018 exports averaged 3.4 Bcf/d from two facilities: Cheniere’s Sabine Pass, La., export terminal and Dominion Energy Inc.’s terminal at Cove Point, Md.

Johnson said Drillinginfo data show January 2019 LNG exports set a record: 5.6 Bcf/d. The firm expects 2019 LNG exports will average 4.3 Bcf/d “as most (additional) facilities are not expected to be fully online until late 2019.” In 2020, exports are expected to jump to 6.5 Bcf/d.

“There’s some growth (in natural gas demand) on the power side,” she added, “but it’s not dramatic. The biggest, most impactful … more than anything (to demand) is LNG.”

 

 

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