Global natural gas security remains a top priority marching into 2024, with a hotly contested U.S. election likely to set energy policy for years to come. North American investment has soared to ensure an ample supply can serve both domestic demand and overseas markets.
In Future In Focus, Natural Gas Intelligence’s experienced team of Thought Leaders delve into the myriad opportunities and questions the industry faces, with a focus on market dynamics, upstream outlooks and price forecasts, along with Mexico’s path forward and major LNG and RNG developments that will shape the future global natural gas landscape.
“Historically speaking, nothing shapes short-term prices more than gas in storage, and the U.S. certainly has plenty of gas in the ground right now,” said NGI’s Patrick Rau, director of strategy and research.
Merging the Lower 48 portfolios of Chesapeake Energy Corp. and Southwestern Corp. is set to create the largest natural gas pure-play in the United States, becoming a “must-own” company with the resources to redefine the global energy reach of independent producers.
“We believe U.S. gas prices need to average lower than we thought previously to incentivize incremental demand via coal-to-gas substitution and lower supply via steeper Haynesville Shale declines,” Goldman Sachs Group’s Samantha Dart said.
Majors have taken equity stakes in Qatar’s massive North Field LNG project, which, along with the United States, is leading the global natural gas supply push. The majors and traders also have signed deals to buy roughly 65% of the 100 mmty of liquefaction capacity under construction in North America, according to an analysis by shipbroker Poten & Partners.
“Our initial projection for the 2024 global E&P capex indicates a 5.0% increase,” the Evercore analyst said. On average, North American upstream budgets should be up by slightly more than 2% from 2023, but down from the 19% increase in capital spending last year versus 2022.
“Two years ago, President Biden committed to sending American LNG overseas to our allies,” said Sommers. “Yet recent reports indicate the administration may abandon this promise. Halting U.S. LNG approvals would put our allies at risk.”
“With Mexico’s economy expected to expand by up to 3.7% in 2024, according to estimates by [Central Bank] Banxico, Mexico is very likely to experience record-high volumes of natural gas demand and imports from the United States,” Adrian Duhalt, research scholar at Columbia University’s Center on Global Energy Policy, told NGI’s Mexico GPI.
“Feed gas demand is, and will continue to be, a key component for the Agua Dulce hub,” Wood Mackenzie natural gas analyst Ricardo Falcón told NGI. “But natural gas outlets in the South Texas border with Mexico have become an increasingly competing element.”
The International Energy Agency (IEA) said in December that in late August, for the very first time, the United States met more than one-half of its electricity demand from natural gas, “encapsulating a summer during which gas-fired electricity generation grew dramatically.”
It was a record month for LNG shipments around the cape, fueled by an influx of U.S. cargoes to Asia. Combined with the ongoing drought at the Panama Canal, heightened risk around the Red Sea led shippers to route 58% of all deliveries in December around the Cape of Good Hope.
During his time in office, the United States has become the world’s largest LNG producer. There are now seven export facilities operating with capacity to churn out 14 Bcf/d of the super-chilled fuel. Five more plants are under construction that would add another 10.7 Bcf/d by the end of the decade.
“We were at roughly 30 facilities when RNG Coalition began in 2011,” Chase said. “So we’ve grown about tenfold in the last 12 years. It’s been a boom time for the industry the last few years, and that definitely is going to continue” in 2024.