Rising market: U.S. LNG imports average +2.5 BCF per day to Asia

Photo courtesy Freeport LNG.

By Rod Walton, Power Engineering and POWERGEN International Content Director

The U.S. is finding homes for its historically high liquefied natural gas production, and most of those are in Asia.

The new report from the U.S. Energy Information Administration shows that LNG exports to Asia increased 67 percent last year compared with 2019. This increase came despite the economic downturns and health crisis created by the COVID-19 pandemic which reportedly started in China.

The shale revolution and innovations in drilling and storage are driving all-time highs in natural gas plays nationwide. Some of that gas is being sent by pipeline to the Gulf Coast, where it is chilled to extreme degrees and turned into liquid for stable storage on shipping.

Once delivered, this LNG can be regasified and purposed for either power generation or heating in other markets. China has been a welcoming nation for some of that natural gas, having lowered its tariff on LNG imports from 25 to 10 percent, according to the EIA.

The biggest Asian markets for U.S. LNG, however, were Japan and South Korea, which combined imported an average of about 1.6 billion cubic feet per day (bcf) in 2020. The deliveries to China averaged 600 million cubic feet daily during the same period. India also is a customer with a growing demand base.

Overall, the export of U.S. LNG averaged 6.5 bcf per day, a 31 percent increase over 2019, the EIA says. If the average price was about $6.22 per thousand cubic feet, as a recent figure for Japanese vessels indicated, then the daily revenue for exporting one billion cubic feet would total close to $6.2 million, according to rough estimates.

Last month, Shell Energy forecast that LNG global demand would reach 700 million metric tons by 2040. The current global LNG demand is about half of that.

“Asia is expected to drive nearly 75% of this growth as domestic gas production declines and LNG substitutes higher emission energy sources, tackling air quality concerns and meeting emissions targets,” the forecast read.

In the U.S., companies such as Cheniere Energy and Sempra LNG are leading construction of LNG terminals on the Gulf Coast. Houston-based Cheniere, in its earnings report one day ago, forecast that it sees decades of LNG growth ahead.

Exported U.S. LNG has the potential to help developing nations convert from coal-fired power or less efficient resources, provide more responsive baseload power and help some countries decrease reliance on regional gas providers such as Russia. The current LNG global demand estimate is about half of that total, according to Shell.

See our POWERGEN 2019 interview with Eagle LNG

The pandemic forced some production cuts for U.S. natural gas in 2020 by about one percent, but the gas field still yielded about 111 billion cubic feet per day, or 69 times the daily LNG expert volume.

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