Uncertain outlook for U.S. LNG, EIA warns

Pipes are wrapped in thick insulation at the first production facility, called a liquefaction train, at Cheniere Energy's Sabine Pass LNG export terminal in Cameron Parish, Louisiana.
Pipes are wrapped in thick insulation at the first production facility, called a liquefaction train, at Cheniere Energy’s Sabine Pass LNG export terminal in Cameron Parish, Louisiana.

With great fanfare last month, federal officials and oil and gas executives trumpeted the first shipment of U.S. liquefied natural gas abroad – from Cheniere Energy’s new export terminal on the Louisiana Gulf Coast.

With four more terminals under construction in Texas, Louisiana and Maryland and several more proposed, the United States appears to be positioned to takeover as a major gas supplier worldwide.

But the horizon is not entirely welcoming, the U.S. Energy Information Administration warned in a report Friday – joining a chorus of energy analysts who wonder whether low prices in world gas markets might slow development.

“Market conditions have changed since many LNG export projects in the United States were initially proposed,” the EIA wrote Friday. “Proposed LNG terminals in the United States face not only increased competition from other domestic and foreign terminals that have been completed, but they also face uncertainty in global LNG demand.”

The agency cites falling demand last year from China, Japan and South Korea, the world’s three largest LNG importers. That was first time those numbers had fallen since 2009, when the the global financial crisis rattled energy markets worldwide.

At the same time, Australia – one of the world’s largest LNG suppliers – just opened two new export terminals on its eastern coast.

Drawing from abundant natural gas reserves along the East Coast’s Appalachian mountains, the United States is hoped by some of its political leaders to one day take a leading role in the international gas market – potentially pushing out geopolitical rivals like Russia.

That goal could well be within sight.

According to EIA, all the U.S. export terminals that are either finished or under construction have the capacity to export more than 10.5 billion cubic feet of gas a day.

In 2014 that would have placed the United States second in the world for LNG exports, slightly behind Qatar, according to data from the Swiss trade group International Gas Union.

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