How The U.S. Could Transform Global Liquefied Natural Gas
https://www.forbes.com/sites/judeclemente/2018/10/12/how-the-u-s-could-transform-global-liquefied-natural-gas/#2bb839342b96Oct 12, 2018
...By the end of next year, the U.S. will have tripled its LNG export capacity to ~10 Bcf/d, or some 25% of the current global market. We are the emerging LNG supplier, as the U.S. demand markets of electricity, industry, and niche uses like transport will not satisfy our production surge. A domestic surplus of gas makes exports the natural next step, and buyers increasingly covet the shorter and more flexible contracts that we offer. We are inserting liquidity to a longtime overly rigid system that limited new entrants.
In fact, we've already shipped to 30 destinations, and some model that we could eventually export over 20 Bcf/d of LNG within 15 years. That's about as much gas as our Marcellus shale play - the largest gas field in the world - yields in total.
Today, LNG accounts for about 12% of all global gas demand but it's the fastest growing way to trade gas. With 40 today, by 2022 there will be over 50 importing nations. After rising 10% last year, LNG demand is expected to jump another 9% this year, with so much more to come. It's an industry that now requires a $200 billion infusion over the next 12 years.
With a rapidly maturing market, key players are building out their marketing and trading capability. As our own LNG exports take flight, the U.S. Henry Hub (HH) gas price, formulated at the main distribution point in Louisiana that serves as the delivery location for gas futures traded on NYMEX, could become a global benchmark price. HH is the most traded gas futures contract in the global market.
And HH is desirable because the price point is based on the transparent fundamentals of supply and demand, with stable, affordable, and increasingly flexible contracts. This is in stark contrast to other gas sales that are based on the price of oil, a precarious oil-indexation that still accounts for 65% of global LNG. U.S. sellers would love to become a global price setter: "How U.S. LNG may create new pricing fundamentals over the coming 5 years."...
