Natural Gas Exports Seen Nearly Doubling by 2021

(February 10, 2020) — The Energy Information Administration (EIA) forecasts that U.S. natural gas exports will exceed imports to the nation by an average of 7.3 Bcfd in 2020, a level 2.0 Bcfd higher than in 2019. And exports are seen surpassing imports by 8.9 Bcfd in 2021. Growth in net exports will be led primary by increases in LNG exports and pipeline exports to Mexico. Net natural gas exports more than doubled in 2019 compared to 2018, and EIA expects they will nearly double again by 2021 from 2019 levels.

The U.S. now trades natural gas by pipeline with Canada and Mexico, and as LNG with dozens of countries. Historically, the U.S. imported more Canadian natural gas by pipeline than it exported to its northern neighbor. In contrast, the U.S. has for some time been a net exporter via pipeline to Mexico. The U.S. has been a net exporter of LNG since 2016 and delivers it to more than 30 countries.

In 2019, growth in demand for U.S. natural gas exports exceeded growth in natural gas consumption in the U.S. electric power sector. Deliveries to U.S. LNG facilities and by pipeline to Mexico accounted for 12% of dry natural gas production in 2019. EIA forecasts these deliveries to account for an increasingly larger share through 2021 as new LNG export facilities are placed in service and new pipelines in Mexico that connect to U.S. export pipelines begin operations.

Net U.S. natural gas imports from Canada have steadily declined in the past four years as new supplies from Appalachia into the Midwestern states have displaced some pipeline imports. Conversely, U.S. pipeline exports to Canada have risen since 2018 when the NEXUS pipeline and Phase 2 of the Rover pipeline entered service. Nonetheless, EIA projects the U.S. will remain a net natural gas importer from Canada through 2050.

U.S. pipeline exports to Mexico increased following expansions of cross-border pipeline capacity, averaging 5.1 Bcfd from January through October 2019. That was 0.5 Bcfd more than the 2018 annual average, according to EIA’s Natural Gas Monthly. The rise in exports was primarily the result of increased flows on the newly commissioned Sur de Texas-Tuxpan pipeline in Mexico, which transports natural gas from Texas to the southern Mexican state of Veracruz.

Several new pipelines in Mexico that were scheduled to come online in 2019 were delayed. They are now expected to enter service this year. Among them are lines in central and southwest Mexico, the 1.2-Bcfd La Laguna-Aguascalientes and the 0.9-Bdfd Villa de Reyes-Aguascalientes-Guadalajara. Pipelines in western Mexico include the 0.5-Bcfd Samalayuca-Sásabe.

U.S. LNG exports averaged 5 Bdfd in 2019, 2 Bcfd more than in 2018 as a result of several new facilities that placed their first trains in service. This year, several more liquefaction units, referred to as trains, are scheduled to be placed in service. They include Trains 2 and 3 at Cameron LNG in Louisiana; Train 3 at Freeport LNG in Texas; and Trains 5 through 10, six moveable modular liquefaction system units, at Elba Island in Georgia.

In 2021, the third train at the Corpus Christi facility in Texas is scheduled to come online, bringing total U.S. liquefaction capacity to a 10.2-Bdfd baseload and a 10.8-Bdfd peak. EIA expects LNG exports to continue to grow and average 6.5 Bcfd in 2020 and 7.7 Bcfd in 2021 as facilities gradually ramp up to full production.

(SOURCE: The Weekly Propane Newsletter, February 10, 2020. Available by subscription)