American Oil and Gas Reporter - December 2022 - 49

European gas prices gained strength on
Russian supply risk, trading at a premium
above the Asian LNG benchmark JKM.
As of March, seven projects totaling
12.8 Bcf/d of exporting capacity were
operating or currently undergoing commissioning.
The Freeport LNG plant was
forced off line after a fire last summer.
The facility is expected to restart in midDecember,
restoring its 2.1 Bcf/d of liquefaction
and export capacity by January.
U.S. LNG feed gas demand is expected
to average 13.4 Bcf/d this winter with
Freeport's scheduled restart.
Based on the current forward market
settlements, estimated netbacks of U.S.
LNG exports to Northwest Europe and
Northeast Asia remain above $30/MMBtu
through 2023. In the near term, U.S. LNG
feed gas demand will be constrained by
nameplate capacity, and the next major
expansion in LNG capacity is not expected
until 2024-25 (Figure 5).
Industrial natural gas demand remains
strong. Despite the increased risk of demand
destruction from high natural gas prices,
the growth of industrial activity will likely
continue as manufacturers try to ease the
bottlenecks in the supply chain. Moreover,
the lower cost of U.S. natural gas relative
to international prices gives U.S. customers
a competitive advantage.
A total of 46 new industrial projects
came on line from 2017 through 2021,
solidifying 1.2 Bcf/d of natural gas demand.
As a result of the shale revolution and its
impact on domestic natural gas prices, the
United States is projected to continue to
see tremendous long-term growth in industrial
demand through 2025. A total of
$32 billion is expected to be invested in
an additional 22 projects scheduled to
come on line between 2022 and 2025: 18
new industrial projects, three plant expapansions
and one facility restart. Together,
these 22 projects will add another potential
1.0 Bcf/d of incremental demand.
A final demand factor is U.S. gas exports
into Mexico, which have increased by 40%
over the past five years, reaching 5.9 Bcf/d
in 2021. The United States has become a
critical supplier to the Mexican power generation
sector as cross-border takeaway
capacity expansions have improved utilization
of downstream pipelines. A case
in point is TC Energy's pending planned
startup of the Villa de Reyes pipeline, allowing
U.S. gas to reach Central Mexico
power plants and industrial facilities. This
project further improves the utilization rate
on the Sur de Texas-Tuxpan pipeline that
draws gas from the Permian.
❒
Editor's Note: The preceding article
was adapted from the Natural Gas Supply
Association's 22nd annual Winter Outlook
report, which was developed using data
from Energy Ventures Analysis Inc., the
U.S. Energy Information Administration,
Moody's Analytics and other sources.
NGSA does not project wholesale or
retail market prices.
DENA E. WIGGINS is president and chief executive officer
of the Natural Gas Supply Association, leading NGSA's efforts
to advance the natural gas industry's economic and environmental
agenda with member companies, regulators, legislators and
other key stakeholders. Wiggins has spent much of her professional
career engaged in representing producer/marketers before the
Federal Energy Regulatory Commission, and has been involved
in every major natural gas rulemaking since Order No. 436.
She is deeply involved in the National Association of Regulatory
Utility Commissioners, particularly the Committee on Gas,
where she has advocated for the benefits of natural gas in a
lower-carbon energy future. Prior to NGSA, Wiggins was a
partner in the law firm of Ballard Spahr and served as general
counsel to the Process Gas Consumers Group. She holds a
B.A. from the University of Richmond and a J.D. from Georgetown
University Law Center.
DECEMBER 2022 49
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