Management for New Fortress Energy Inc. expects liquefied natural gas (LNG) demand to “materially” exceed supply through 2039, saying in the third quarter 2021 earnings report that underinvestment in fossil fuels has left the global market vulnerable.

Investment in oil and gas projects, according to NFE, has dropped sharply in recent years, going from $800 billion in 2014 to $400 billion today. Meanwhile, climate-related events like a lack of rainfall in Brazil and inclement weather in China are happening more frequently and jolting the market. Global gas prices have skyrocketed this year in response. 

The trend has NFE positioned to match growing demand, particularly in underserved markets. Ongoing energy shortages in Brazil have led to emergency power measures, including an auction in the south and southeast part of the country in October. NFE said 1.2 GW of new power projects were awarded at the auction.

The company’s Santa Catarina terminal under development in the southern region of Brazil could supply more than 900,000 gallons/day of LNG to the new power plants. 

“I think our terminal is very well situated,” said NFE managing director Andrew Dete during a call to discuss quarterly results. “Outside of some very limited domestic gas, our LNG terminal is really the main source of supply for fuel to these new power plants.”

South America has imported significant amounts of LNG this year, particularly in Brazil. Cargo arrivals have hit record levels amid a historic drought that has left hydropower reservoirs depleted and created power shortages. NFE said 18 million gallons/day of LNG are being imported into Brazil to meet energy needs, compared to historical levels of about 4 million gallons/day.

NFE gained a foothold in Brazil earlier this year when it acquired Golar LNG Partners LP and Hygo Energy Transition Ltd. in a deal valued at $5 billion. NFE took over an operational import terminal and power plant in the country. It is also developing similar assets to the north and south of the operational Sergipe facility. The company has inked deals with a wide variety of Brazilian customers this year to underpin its import terminals and power generation projects there.

Despite its bullish views on natural gas, the company also is moving ahead with plans to deepen its role in the energy transition. Earlier this year, NFE said it would form a new company dedicated to producing hydrogen and renewable fuels. Management said on the earnings call that a final investment decision (FID) on a blue ammonia production terminal is close. 

The company expects to acquire a site along the U.S. Gulf Coast by the fourth quarter and expects the new facility to be operational two years after FID.

Timelines on other projects at NFE have continued to slip. The company again pushed back the start-up date for its 2.4 million gallons/day import terminal and 300 MW gas-fired power plant in Nicaragua. Those assets were expected to come online by June after delaying start-up late last year following construction and permitting delays. NFE now expects to complete construction on the assets by the end of the year and commission the power plant in 1Q2022. 

A 1.8 million gallons/day receiving terminal at the Port of Pichilingue in Baja California Sur, Mexico, also started operations this year, but a 135 MW gas-fired power plant there is now expected to be commissioned by the end of the year instead of October as originally forecast. 

NFE has similar projects operating or under development in the Caribbean, Europe, Latin America, the United States and Asia.

NFE said its LNG sales increased to 1.8 million gallons/day during the third quarter, up from 1.5 million gallons/day in the year-ago period. 

The company reported a third quarter net loss of $17.8 million (minus 5 cents/share), compared to a net loss of $37 million (minus 21 cents) in the year-ago period.