According to S&P Global Platts, the US exported an average of 7.4 billion cubic feet (bcf) a day of gas in November, more than the 7 billion that was imported. It has been nearly 60 years since that last occurred.
There are two trends driving this
- Exports from the Cheniere LNG terminal at Sabine Pass are ramping up. The first train started exporting in February and now averages 0.5 Bcf a day. Currently Cheniere is building 5 trains at Sabine Pass. The company is also building 2 trains at Corpus Christi. Each train can produce about 0.6 Bcf a day when running at full capacity. Contracts already exist for 87% of the LNG to be produced in these 7 trains. The second train at Sabine Pass has recently been completed. Though contractual shipments don’t kick in until mid-2017, exports for spot contracts have already begun as Cheniere gets that train fully operational.
- Exports to Mexico have increased by about 0.5 Bcf a day in 2016. This is due to Mexican economic growth coupled with limited in-country power infrastructure. Mexico has few pipelines and little storage capacity causing it to be increasingly dependent on the US.
In addition to Cheniere, there are other LNG export terminals under construction. These facilities have take-or pay contracts in place for another 4 BCf a day. Most of these facilities won’t start exporting until 2018 at the earliest. Therefore the US is likely to remain a net exporter on a consistent basis.
Given that US demand for gas has also been increasing, due to retirement of coal-fired power stations (a trend that is happening worldwide, including China) and increased petrochemical production, natural gas prices in the US will continue to rise.