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US Became Net Natural Gas Exporter in 2017: Will It Benefit MLPs?

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Mar. 22 2018, Updated 11:36 a.m. ET

A net exporter of natural gas

According to the US EIA (Energy Information Administration), the US exported more natural gas than it imported in 2017. This made it a net natural gas exporter for the first time since 1957. Natural gas production has increased significantly in the last ten years, as we discussed in the previous part of this series. Natural gas exports growth is driven by pipeline exports to Canada and Mexico as well as LNG (liquefied natural gas) exports.

The increased natural gas demand from Mexico is driven by higher demand from Mexico’s power sector. Kinder Morgan (KMI) believes that there are significant growth opportunities for the company’s natural gas infrastructure driven by greater natural gas demand.

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US LNG exports

US LNG exports increased after Cheniere Energy’s (LNG) Sabine Pass LNG terminal began operations in 2016. Cheniere Partners (CQP) is developing liquefaction facilities at the Sabine Pass terminal. It now has four liquefaction units currently operating with a fifth one under construction.

Dominion Energy Midstream Partners’ (DM) Cove Point LNG facility exported its first LNG cargo on March 1, 2018. After Sabine Pass, Cove Point is the second currently operating LNG export facility in the US.

According to the EIA, four other LNG projects are currently under construction. These are expected to increase the US liquefaction capacity from 3.6 Bcf/d (billion cubic feet per day) to 9.6 Bcf/d by the end of 2019. This will further increase US natural gas exports.

The energy sector indicators discussed so far in the series look positive for MLPs in general. In the next few parts, we’ll discuss MLP yields, performance, fund flows into MLP ETFs, and Wall Street ratings for selected MLPs.

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