Conor here: As the following piece demonstrates, it sure is convenient for US natural gas production that Russia and Europe have been severed and someone blew up those Nord Stream pipelines. Germany isn’t a top receiver of US LNG yet, but that is likely to change. A March 3 report from the German economy ministry details Berlin’s plans for an extensive LNG infrastructure to ensure security of supply. The report says that with several floating import terminals and three fixed onshore ports, Germany could rely on about 30 bcm per year starting in 2027.
One problem: Welt am Sonntag, citing a recent local McKinsey study, reported on Sunday that by 2025 the country will lack four gigawatts of power capacity, while by 2030 the deficit could increase to 30 gigawatts.
“So we’re heading toward a significant shortage: 30GW corresponds to the capacity of about 30 large thermal power plants,” the study warned.
And yet the witch hunts in Germany for former politicians who had close ties with Russia continue, and nobody asks any questions about who blew up the pipelines, but the Green economy minister Robert Habeck assures everyone that they’re learning from their current predicament:
“Russia’s attack on Ukraine has made us realise how dangerous unilateral dependencies are and that they cost us,. We would be fools not to learn from this.”
By Wolf Richter, editor of Wolf Street. Originally published at Wolf Street.
US natural gas production rose to a record 39 trillion cubic feet in 2022, according to EIA data, having soared by 33% since 2017 and having doubled since 2006, amid the massive US fracking boom that reshaped the energy landscape in the US globally. By 2008, with limited demand in the US and not enough export possibilities, the price of natural gas in the US collapsed ( for a neck-breaker rollercoaster, see the long-term price chart at the bottom). In 2011, the US became the largest natural gas producer in the world.
The US has exported natural gas via pipelines to Mexico since the late 1990s, and to a lesser extent to Canada (from which is also imports natural gas). And the US has long had a small Liquefied Natural Gas (LNG) export terminal in Alaska.
But large-scale exports of LNG to the rest of the world was impossible until the first large-scale LNG export terminal on the Gulf Coast began operating in 2016. And as the LNG export boom took off, providing more demand for US production, US production skyrocketed:
Exports of natural gas.
Total exports of natural gas via LNG to the rest of the world, and via pipelines to Mexico and Canada rose to a new record of 6.89 trillion cubic feet, or roughly 18% of US production.
Exports via LNG rose by 3.6% in 2022 to 3.87 trillion cubic feet, up from near-0 in 2015. Exports were handicapped by the shutdown of the Freeport natural gas liquefaction plant in Texas last June, after a major fire, which cut LNG export capacity by 17% for the second half of the year. Exports did not resume until this year.
Exports via pipeline to Mexico took off over 20 years ago and in 2021 reached a record of 2.15 trillion cubic feet, but dipped to 2.07 trillion cubic feet in 2022 (the US imports no natural gas from Mexico).
Exports to Canada via pipeline have remained relatively stable over the years, and in 2022 rose to 952 billion cubic feet, but that was below the 2019 volume (the US imports more natural gas from Canada than it exports to Canada).
In the chart, you can see the slower growth in LNG exports (purple line) in 2022 due the shutdown of the Freeport LNG export terminal. The green line represents exports via pipeline to Mexico and Canada. The red line is total natural gas exports:
LNG Exports by region and country.
Asia had been the dominant buyers of US LNG, at first Japan and South Korea. China and India also became big buyers starting in 2020. In 2021, exports of LNG to Asia reached a record 1.68 trillion cubic feet, nearly half of total LNG exports, according to EIA data. But in 2022, sales to Asia plunged by 46% (green line), as US LNG was diverted to Europe.
European countries with LNG import terminals became large buyers of US LNG. Combined, they bought 2.47 trillion cubic feet in 2022, about 64% of total US LNG exports (red).
Even though Germany ended up with some of the gas through the European gas distribution network, it didn’t have LNG import terminals until the very end of the year, and so it doesn’t show up as a major buyer.
The buyers in Europe were coastal countries with LNG import terminals and with chartered Floating Storage and Regasification Units (FSRU). The largest buyers in Europe were, in billion cubic feet (Bcf)
- France: 571 Bcf
- United Kingdom: 464 Bcf
- Spain: 426 Bcf
- Netherlands: 378 Bcf
- Poland: 127 Bcf
- Italy: 116 Bcf
- Belgium: 80 Bcf
Exports to Latin America plunged by 60% in 2022, to 245 billion cubic feet (gray).
Exports to the Middle East and Africa rose to 249 billion cubic feet (blue).
For your amusement: The price of US natural gas.
Today, the price of natural gas futures edged over $3 per million Btu for the first time since January, after having dropped as low as $2.20 in February, after having spiked to nearly $10 in the summer of 2022.
Note the much higher prices that prevailed before 2008, before fracking unleashed the biggest and fastest supply surge ever, upon which the price collapsed, pushing many dozens of smaller shale oil and gas drillers into bankruptcy, plus some big ones, including finally Chesapeake Energy in 2020, which marked the end of the Great American Oil and Gas Bust and the beginning of the recovery: