America Set to Lead Global LNG Market
Liquefied natural gas (LNG) is the fastest-growing sector in the energy industry.
According to a new report from Global Energy Monitor (GEM), over $1.3 trillion is being invested right now in over 200 LNG terminal projects around the world.
GEM counts 202 LNG terminal projects currently in development, including 116 export terminals and 86 import terminals worldwide. It estimates that these new terminals will triple global LNG export capacity once completed.
Leading the new LNG boom is the United States.
America is spending more on LNG development than any other nation in the world. GEM reports that over $500 billion of the money being spent on LNG projects is being invested here in America. (Canada is a close second, with $410 billion being invested into LNG.)
More than 70% of global LNG investment is being focused on North America. And that makes a lot of sense. Since 2000, the United States and Canada have seen big increases in proven natural gas reserves due to the development of shale gas.
The U.S. now has the world's fourth-largest recoverable natural gas resource. And it's also the world's #1 producer of the fossil gas. That's great for America. But the thing about natural gas is this: It's expensive to export.
Most international natural gas trade is regionally transported via pipeline. But the past 20 years have seen rapid development in LNG technologies. These technologies have made natural gas exports much cheaper and opened the door to much more LNG trade.
GEM reports that only 5.5% of natural gas was transported in liquefied form in 2000. Since then, however, the share of LNG in the global system has doubled to 11%.
As the largest producer and with hundreds of billions being spent on LNG terminal projects, the United States is set to lead the world's liquefied natural gas market.
That's good news for American energy investors.
No, it's great news.
If America can maintain proper trade relationships with the right foreign nations.
The United States doesn't absolutely need trade relationships with all foreign nations. It does, however, need solid trade relationships with the right foreign nations. And in the case of LNG, the “right” foreign nations would be allies with significant natural gas demand.
Fortunately, the U.S. Department of Energy is working to make sure that happens.
There is, of course, much ado about President Trump's foreign policies. And only a fool would say Mr. Trump has absolutely helped American foreign relations in every matter.
But the Energy Department — man, I've got to give credit where credit is due — the Energy Department is doing its job well, at least in terms of developing America's LNG industry. Most notable right now is the Energy Department's agreements with Europe.
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Back in May, the European Commission (EC) reported that LNG imports from the U.S. increased by 272% since 2018.
EC data showed record U.S. LNG imports in March of this year totaling 49 Bcf. Following that, U.S. Energy Secretary Rick Perry signed two export orders that will more than double America's LNG exports to 112 Bcf by next year.
On top of that, the EC said LNG imports could increase from there to 282 Bcf by 2023. That would make Europe one of America's top LNG importers.
The LNG market is quite sensitive to trade agreements. And although the media has painted a broad picture of U.S. foreign trade deterioration (which isn't completely untrue), there really are very positive forward steps being taken (out of the limelight) to develop America's LNG export industry.
That's why the smart money is jumping into LNG faster than ever before.
Our resident oil and natural gas expert Keith Kohl is putting his money in a newly discovered oil and natural gas region of Texas.
This massive area could rival some of the biggest American energy resource discoveries in history. And it could be the next millionaire-making area waiting to pay out to early investors.
Until next time,
As an editor at Energy and Capital, Luke’s analysis and market research reach hundreds of thousands of investors every day. Luke is also a contributing editor of Angel Publishing’s Bubble and Bust Report newsletter. There, he helps investors in leveraging the future supply-demand imbalance that he believes could be key to a cyclical upswing in the hard asset markets. For more on Luke, go to his editor’s page.
Writer's note: The Global Energy Monitor report mentioned in this article, titled “The New Gas Boom,” is a paper examining the role of the growing LNG market on climate change, particularly how it compares to coal. It does not wholly focus on global LNG market development.
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