Cheniere Doubles Down On US Gas Exports as Demand Remains Strong

Cheniere Energy Inc. has been the leading natural gas exporter in the United States for years now, with no signs of slowing down. In 2020, Cheniere doubled down on their US gas exports by signing two long-term deals with two of Europe’s biggest utilities. These deals demonstrate Chenier’s commitment to meeting increasing global demand for natural gas and solidifies their position as an industry leader in the space. In this blog post, we will explore Cheniere’s recent moves and discuss why US natural gas exports remain so strong despite the pandemic. We will also examine what impact these developments have on the US energy landscape and how other companies can benefit from similar initiatives.

Who is Cheniere?

Cheniere Energy is one of the leading developers, owners and operators of liquefied natural gas (LNG) assets in the United States. The company owns and operates the Sabine Pass LNG terminal in Louisiana, which is the first large-scale LNG export facility in North America.

In addition to its Sabine Pass facility, Cheniere also has two other LNG export terminals under construction: Corpus Christi LNG in Texas and Cameron LNG in Louisiana. Both of these terminals are expected to come online by 2019.

Advertisement

Once all three terminals are operational, Cheniere will have a combined export capacity of over 30 million tonnes per annum (mtpa). This will make it the largest LNG exporter in the United States.

Cheniere’s expansion into the LNG export market comes as global demand for natural gas continues to grow. According to the International Energy Agency, global demand for natural gas is expected to increase by nearly 50% by 2030.

With its three world-class LNG export facilities, Cheniere is well positioned to meet this growing demand.

What is LNG?

LNG, or liquefied natural gas, is a versatile fuel that can be used for electricity generation, heating, and transportation. LNG is produced by cooling natural gas to -260°F (-162°C), at which point it becomes a liquid. This process reduces the volume of natural gas by up to 600 times, making it easier to store and transport.

Advertisement

LNG is typically transported by tanker ship and must be kept cold during transit. Once it reaches its destination, it is regasified and can be used as a clean-burning fuel for power generation, home heating, and transportation.

LNG is an increasingly popular fuel choice due to its low emissions and high efficiency. In fact, LNG emits up to 60% less carbon dioxide than coal when used for electricity generation. Additionally, LNG is a versatile fuel that can be used in a variety of applications including power generation, transportation, and home heating.

What are the benefits of exporting LNG?

As the world looks to decarbonize its energy mix, gas – and specifically LNG – is playing an increasingly important role. Not only is gas cleaner than coal when burned, but the rise of renewables has created a need for flexible “dispatchable” power that can be called on when the sun isn’t shining or the wind isn’t blowing. This has led to strong demand for US LNG exports, which are expected to grow from around 10 billion cubic feet per day (Bcf/d) in 2019 to over 30 Bcf/d by 2030.

There are a number of reasons why exporting LNG makes sense for the United States:

Advertisement

1) Gas is abundant and relatively cheap in the United States thanks to the shale revolution. This abundance has driven down domestic gas prices, making US LNG exports competitive in global markets.

2) Exporting LNG provides an important outlet for excess gas production, helping to avoid potential supply gluts and price collapses in domestic markets.

3) The growing demand for LNG globally creates an opportunity for the United States to capitalize on its strategic location and well-developed infrastructure.

4) Selling LNG abroad helps to improve the trade balance, as export revenues exceed import costs. This is an important consideration at a time when the United States is looking to reduce its trade deficit.

5) Exporting LNG supports jobs throughout the supply chain, from exploration and

Advertisement

Who are Cheniere’s customers?

As the leading exporter of liquefied natural gas (LNG) in the United States, Cheniere Energy serves customers all over the world. In 2019, Cheniere shipped LNG to customers in Asia, Europe, Latin America, and the Middle East.

One of Cheniere’s most notable customers is British Petroleum (BP), which signed a 20-year contract with Cheniere in 2011 for the purchase of LNG. Under the deal, BP will buy up to 3 million tons of LNG per year from Cheniere’s Sabine Pass facility in Louisiana.

Other major customers of Cheniere include Total SA, Shell, and South Korea’s KOGAS. Together, these four companies accounted for over 60% of Cheniere’s LNG exports in 2019.

How has the pandemic affected LNG demand?

Advertisement

The COVID-19 pandemic has had a profound effect on LNG demand, with global consumption falling by around 15% in 2020. This is largely due to economic activity slowing down in many countries, as businesses have been forced to close their doors and people have been confined to their homes. This has led to a reduction in energy consumption, as factories and power plants have been idled and transportation has been limited.

While the pandemic has caused a drop in demand for LNG, Cheniere remains bullish on the prospects for US gas exports. The company is investing heavily in new export terminals, betting that the long-term fundamentals for natural gas remain strong. There is growing demand for cleaner-burning fuels like natural gas, as countries look to transition away from coal and oil. And with the US shale boom showing no signs of slowing down, there is an abundance of cheap gas available for export.

Despite the challenges posed by the pandemic, Cheniere is doubling down on its bet that US gas exports will remain strong in the years to come.

What’s next for Cheniere?

As the leading exporter of liquefied natural gas (LNG) in the United States, Cheniere is well-positioned to take advantage of the growing demand for LNG around the world.

Advertisement

In the short-term, Cheniere is focused on completing construction of its Sabine Pass Liquefaction Facility in Louisiana and bringing it into full commercial operation. Once operational, the facility will have a nominal production capacity of approximately 4.5 million metric tons per annum of LNG.

Looking further ahead, Cheniere is actively pursuing opportunities to expand its liquefaction capacity at its Sabine Pass facility and build additional export facilities elsewhere in North America. With strong demand for LNG expected to continue, Cheniere is well-positioned to grow its business and become an even more important player in the global LNG market.

Conclusion

Cheniere’s decision to double down on US gas exports shows that the demand for US natural gas remains strong. With its advanced infrastructure and vast reserves of inexpensive natural gas, Cheniere is well-positioned to take advantage of this increasing demand. The company’s dedication to providing clean, affordable energy will help ensure that the United States maintains a competitive edge in global markets and keeps up with rising consumer demands for green energy sources.