US LNG exports
The sudden spike in US natural gas (UNG) exports is mainly due to higher LNG (liquefied natural gas) exports. Cheniere Energy (LNG), a midstream energy company mainly focused on LNG exports and imports, started LNG exports after the commissioning of Train 1 at Sabine Pass in February 2016. This was the first US LNG export from the Lower 48 states.
Cheniere Energy indirectly owns LNG assets at Sabine Pass through Cheniere Energy Partners (CQP).
The decline in US LNG exports in August 2016 was mainly due to the shutdown of Train 1 at Sabine Pass for maintenance work. The company announced substantial completion of Train 2 on September 15, 2016.
Cheniere Energy exported 18 cargoes in 3Q16, including 15 operational cargoes from Train 1 and three commissioning cargoes from Train 2. The company has exported ~114 MMBtu (million British thermal units) of LNG on September 30, 2016. Cheniere Energy is expected to build seven train platforms, including five at Sabine Pass and two at Corpus Christi.
US LNG supply outlook
The US Department of Energy has approved six LNG facilities to date. Out of these facilities, five have begun construction. The five LNG facilities under construction are expected to add 9.2 bcfpd (billion cubic feet per day) of LNG to the global market.
Upon completion of these facilities, the US is expected to become the third-largest exporter of LNG after Australia and Qatar. The five LNG facilities include:
- Two facilities (at Sabine Pass and Corpus Christi) by Cheniere Energy
- Cameron LNG Terminal by Sempra Energy (SRE)
- Freeport LNG Terminal
- Dominion Midstream Partners’s Cove Point Terminal
Although Energy Transfer Equity (ETE) has received its approval, the FID (final investment decision) is still pending on ETE’s Lake Charles LNG export project.
Global LNG market
The global LNG market has continued to face a supply glut due to the growing LNG supplies and weak demand from established LNG-importing countries such as Japan, Korea, and Brazil.
However, the growth of LNG imports from emerging (EEM) and new markets have more than offset the decline in the short term. In the long run, we should wait to see how global demand matches with the additional supplies.