US natural gas production surpasses Russia

Chuck Devore:

Last year Gazprom, Russia’s state-owned natural gas company, provided some 40 percent of Europe’s gas needs. Gazprom produced 16.6 trillion cubic feet of gas.

By comparison, America produced almost 27 trillion cubic feet of natural gas in 2017 and, according to the U.S. Energy Information Administration, is on track to produce 43 trillion cubic feet of natural gas by 2050.

This rising surge of natural gas production in the U.S. is a good thing for our economy, our energy independence, and the national security of our European allies looking to rely less on Russian production.

In the past decade, pipeline and storage infrastructure acted to limit U.S. natural gas production, as supply outstripped demand in some regions, keeping prices low. But, infrastructure has gradually improved and the advent of liquefied natural gas (LNG) export terminals have significantly enhanced the market for U.S. natural gas producers.

There were no LNG export terminals in the U.S. prior to 2016. In fact, America’s first LNG export terminal, Cheniere Energy’s Sabine Pass facility in Louisiana, was originally built as an LNG import terminal in 2008 when experts thought the U.S. was facing a severe national gas shortage. Fracking changed all that, with the price of natural gas at the Henry Hub declining 70 percent in inflation adjusted terms from 2008 to 2017.

Less than 10 years after fearing America would need dozens of LNG import terminals to meet its energy needs, America instead became a net natural gas exporter in 2017, with exports quadrupling from 0.5 billion cubic feet of gas per day in 2016 to 1.94 billion cubic feet per day. Of U.S. LNG exports last year, 53 percent went to Mexico, South Korea and China, with the largest share, 20 percent, being received by Mexico.

Now U.S. LNG exports are set to quintuple by 2019 from 2017 levels to 9.6 billion cubic feet per day or 3.5 trillion cubic feet per year with the U.S. on track to become the world’s third-largest natural gas exporter by 2020, behind only Australia and Qatar. By comparison, 9.6 billion cubic feet is about one-third of what the U.S. uses to generate electricity on an average day and about equal to residential gas use for heating.
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There is more.

The growth in US LNG exports to Europe is a good strategic move that lefts the heavy hand of Russia from European energy needs.  Some of the first to import US LNG are Eastern European countries that were once under the thumb of the Russians.  These exports are also a good thing for US trade deficit reduction and for the environment.