US expected to be top exporter of LNG in 2022; China top importer
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Kristen Nelson Petroleum News
In 2021 the United States was the third largest exporter of liquefied natural gas - after Australia and Qatar - but this year the U.S. is projected, for the first time, to top the list.
On the import side, China surpassed Japan last year as the largest importer of LNG, the first time Japan has not been the largest importer since it began importing LNG in the early 1970s.
As a result, the world’s largest economies will lead the LNG export and import markets, IHS Markit observed in releasing its “LNG Trade in 2021: Runaway Recovery” in early January.
The U.S. Energy Information Administration agrees on the U.S. numbers, noting in a December release that the U.S. LNG export capacity will be the world’s largest by the end of 2022.
The U.S. was the largest source of LNG supply growth in 2021, IHS Markit said Jan. 5, adding 25 million metric tons “amid continued buildup of liquefaction capacity as well as the ramping up of output from plants turned down the previous year,” with average utilization of U.S. plants growing from 43% in third quarter of 2020 to 98% in third quarter 2021.
Capacity additions Major U.S. LNG export capacity additions will come online by the end of 2022, EIA said:
*Train 6 at the Sabine Pass LNG export facility will add up to 0.76 billion cubic feet per day of peak export capacity; it came online in late November and the first cargo was expected to be shipped before the end of the year.
*At Calcasieu Pass LNG, 18 liquefaction trains with a combined peak capacity of 12 million metric tons per year, 1.6 bcf per day, commissioning began in November and first production was expected before the end of the year, with all liquefaction trains expected to be operational by the end of 2022.
Key LNG trends IHS Markit said in addition to the U.S. topping the export market and China topping the import market there were other significant trends:
*A rebound of long-term contract signings after a pause in 2020. Firm, long-term contracts exceeded 65 million metric tons per annum in 2021, surpassing a previous record of 61 million in 2013, with signings among sellers roughly split between the U.S., Russia, Qatar and portfolio suppliers, many of whom are likely to source LNG from U.S. projects. IHS Markit said “U.S. projects were by far the largest source of pre-final investment decision (FID) contracts, as most contracts signed in Qatar and Russia were for capacity that is either already existing or under construction.”
*Spot LNG prices set new records, spiking to nearly $30 per million British thermal units in Asia in early 2021, before settling back to normal ranges, but “by August both Asian and European spot LNG prices climbed well above their oil price equivalent and remained above it for the rest of the year,” ending December at $40 per million Btu, “more than double the previous peaks achieved in the several years following Japan’s 2011 nuclear crisis.”
*In Brazil, imports hit an all-time high.
*European LNG imports fell, reflecting global market balances, as less supply was available to Europe due to strong demand in Asia and South America.
*Plant utilization rates outside the U.S. suffered, with LNG plants across the Atlantic and Pacific basins facing “unexpected outages and gas feedstock shortfalls from maturing production, dragging down average global utilization below the previous five-year average (excluding the price-responsive shut-ins in the United States in 2020),” with utilization particularly weak during summer in the northern hemisphere with non-U.S. utilization averaging 11 percentage points below the five-year average.
US plant capacities EIA cited two capacity measures - nameplate or nominal, reflecting production in a year under normal operating conditions, based on engineering design, and peak capacity, reflecting production “under optimal operating conditions, including modifications to production processes that increase operating efficiency.”
In October, EIA said, the U.S. Federal Energy Regulatory Commission approved requests to increase authorized LNG production at the Sabine Pass and Corpus Christi LNG terminals by a combined 261 billion cubic feet per year, 0.7 bcf per day, with the increases to be achieved by optimizing operations, including production uprates and modifications to maintenance.
As of November, EIA said it estimated U.S. LNG nominal capacity at 9.5 bcf per day, and peak capacity 11.6 bcf per day, with peak capacity including uprates to LNG production capacity at Sabine Pass and Corpus Christi.
By the end of 2022, EIA said U.S. nominal capacity is expected to increase to 11.4 bcf per day, with peak capacity at 13.9 bcf per day, exceeding the capacities of Australia and Qatar, currently the largest LNG exporters.
The agency said Australia has an estimated peak capacity of 11.4 bcf per day while Qatar’s peak capacity is 10.4 bcf per day.
By 2024, when construction is complete and operations begin at Golden Pass LNG, the eighth U.S. LNG export facility, U.S. peak LNG export capacity will increase to an estimated 16.3 bcf per day.
- KRISTEN NELSON
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