With robust demand from both Europe and Asia for U.S. supplies of liquefied natural gas (LNG) and strong levels of pipeline deliveries to Mexico, the Energy Information Administration (EIA) forecasted that U.S. gas exports would exceed imports by an average of 11.0 Bcf/d in 2021. That would mark a nearly 50% jump from the 2020 average of 7.5 Bcf/d.
EIA also said in its August 2021 Short-Term Energy Outlook (STEO) that, for the first time since LNG exports from the Lower 48 began in 2016, annual send-outs of the super-chilled fuel this year are expected to outstrip pipeline exports — by 0.6 Bcf/d.
“We forecast total U.S. natural gas exports to continue to grow throughout 2021 and 2022, exceeding the record of 14.4 Bcf/d set in 2020,” EIA researchers said in a note Monday following up on the latest STEO.
Demand from Asia and Europe, where storage levels are depleted, is steady and expected to continue driving demand through the coming winter. Additionally, pipeline exports to Mexico, already strong in the spring, accelerated this summer amid intense heat and elevated cooling demand.
EBW Analytics Group estimated that year/year net exports ran 4.0 Bcf/d higher in April and May and then accelerated to 6.3 Bcf/d in June and topped 8.0 Bcf/d in July. This helped to drive natural gas futures above $4.00 last month and to highs last seen in 2018.
Though natural gas prices have eased in August as weather forecasts indicate the Lower 48 has passed peak summer heat, the EBW team noted that demand from Europe in particular shows no signs of easing.
“European natural gas futures have been soaring amid growing concerns over winter supply adequacy and the risks of winter shortages,” the EBW analysts said Monday. “As international gas prices rise, the upside risk for U.S. prices also increases.”
EIA said it expects U.S. exports of natural gas by pipeline and as LNG combined to average nearly 18.4 Bcf/d in 2021 and 19.3 Bcf/d in 2022. “LNG exports exceeded pipeline exports for the first time on a monthly basis in November 2020, and we expect them to average about 9.5 Bcf/d and exceed” pipeline exports (8.9 Bcf/d) in 2021, researchers said.
Natural gas exports accounted for 23% of total U.S. energy exports last year, EIA noted. U.S. LNG exports in particular have grown as the United States has added LNG export capacity and expanded its LNG export destinations.
That noted, exports by pipeline — most sent to Mexico— began exceeding imports on an annual basis in 2019. “In 2020, U.S. pipeline exports exceeded imports by 1.1 Bcf/d, and we expect this difference to increase to 1.7 Bcf/d in 2021 and 2.5 Bcf/d 2022,” EIA said.
Domestic demand has proven high this summer as well, driving up prices over the course of June and July when scorching heat waves permeated large swaths of the country. This galvanized higher import levels, but not enough to match the demand for U.S. exports, EIA said.
“We expect U.S. imports of natural gas by pipeline and as LNG, combined, to increase by 6% compared with 2020, averaging 7.4 Bcf/d in 2021, before declining to 6.9 Bcf/d in 2022,” researchers said, noting that nearly all imports enter the United States from Canada to meet needs in Midwestern and Western markets.
U.S. pipeline imports previously had dropped annually since 2008. However, EIA said, “we expect pipeline imports of natural gas to increase in 2021 because of relatively flat U.S. dry natural gas production” in addition to higher consumption.In the latest STEO, EIA estimated Henry Hub spot prices would average $3.42/MMBtu for all of 2021, up from $3.21 predicted a month earlier. The agency raised its expectations after prices soared to an average $3.84 in July, a nearly 60-cent month/month increase from the June average of $3.26.
© 2021 Natural Gas Intelligence. All rights reserved.
ISSN © 1532-1231 | ISSN © 2577-9877 | ISSN © 1532-1266 |