For the first time ever, the European Union imported more LNG from the United States in June than pipeline gas from Russia, as Moscow cut supply to Europe in the middle of last month.
Going forward, demand for US LNG is set to remain strong as Europe struggles to reduce its reliance on Russian pipeline gas.
In the US, LNG export capacity is increasing as new trains at Sabine Pass and Calcasieu Pass went live this year. But to continue to grow, the LNG industry will need more domestic midstream infrastructure – pipelines – to transport natural gas from production centers to LNG export terminals on the US Gulf Coast and demand centers on the East Coast.
The Marcellus-Utica Basin, the largest U.S. natural gas producing region, and the second largest shale gas producing region, the Permian, could soon face pipeline constraints that could undermine America’s ability to increase LNG exports, writes energy analyst David Blackmon. Forbes.
The Federal Energy Regulatory Commission (FERC) has not struggled to approve pipeline projects, while mixed messages from the Biden administration continue to add uncertainty for upstream and midstream operators.
There is also opposition from communities to pipelines crossing their land or passing near their homes.
That’s the case with the Matterhorn Express Pipeline, designed to carry up to 2.5 billion cubic feet per day (Bcf/d) of natural gas over about 490 miles from Waha, Texas, to the Katy region near Houston in Texas. Pipeline developers WhiteWater, EnLink Midstream, Devon Energy and MPLX LP reached a final investment decision in May to proceed with construction of the pipeline, which is expected to be operational in the third quarter of 2024, pending receipt of customary regulatory and other approvals.
However, landowners in Williamson County, where the pipeline is planned to pass, are concerned about the pipeline’s effects on their properties, although the county is home to at least a dozen pipelines already. Some Williamson County residents have asked pipeline developers to reroute some portions of the project.
“Williamson County is on the most direct path from Midland to Freeport,” County Commissioner Russ Boles told the Austin American-Statesman.
The industry, for its part, is seeking streamlined approval of pipeline projects that would help bring more natural gas to U.S. demand centers and LNG export facilities.
There are currently 11 major natural gas projects pending approval before FERC, more than half of which have their final environmental documents, the Interstate Natural Gas Association of America (INGAA) said in late March 2022, days after the The US and the EU announced a deal for more US LNG exports to the EU as the latter seeks to replace Russian supplies.
“FERC approval is the imperative next step for these important projects. Without the additional capacity, which totals more than 12,141 MMcf/d currently pending, some of the additional natural gas supply policymakers are calling on developers to produce will not reach American consumers or LNG terminals along of US shores for export,” INGAA said.
The American Petroleum Institute (API) has a ten-point plan to restore US energy leadership. That plan includes a recommendation that FERC “should cease efforts to override the permitting authority under the Natural Gas Act and adhere to traditional assessments of public needs as well as focus on the immediate impacts resulting from construction and operation of natural gas projects”.
US LNG exports are set to decline in the second half of 2022 due to the shutdown at Freeport LNG, the EIA said in its latest short-term energy outlook (STEO) on Tuesday. US LNG exports are expected to average 10.5 Bcf/d in the second half of 2022, down 14% from the June 2022 STEO forecast.
EPE expects LNG exports to increase in 2023, averaging 12.7 Bcf/d on an annualized basis, or 17% higher than in 2022.
The US will need pipelines and a federal policy that supports such projects in order to continue to grow LNG exports and deliver natural gas to domestic demand centers.
By Tsvetana Paraskova for Oilprice.com
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