Even with a ceasefire nominally in place, the Iranian conflict has so far resulted in the loss of crude oil and LNG shipments via the Strait of Hormuz, creating further instability and renewing fears a global energy shock will continue or worsen if the conflict renews. The situation in the Middle East highlights the importance of American gas production and LNG exports.
LNG Exports – America’s Energy Superpower?
Already the globe’s foremost exporter of LNG, commanding about 20 percent of the market, the U.S. industry is being asked to ramp up to higher levels to help fill the void created by the loss of about a fifth of the world’s LNG due to the war. Energy Secretary Chris Wright recently told the CERAWeek conference in Houston that natural gas is “America’s superpower.” Considering current events, that almost seems an understatement.
“Natural gas,” Wright noted, “is our largest and cheapest source of electricity. It is our main heating fuel. It is our main industrial fuel, our petrochemicals, fertilizer.” Wright added that natural gas is crucial to U.S. success in the race for AI dominance, calling it the key to make AI “economically compelling to bring back energy-intensive manufacturing to our country.”
While “oil remains the most important source of energy in the world,” Wright pointed out that it is slowly losing market share to natural gas, which he says is both less expensive and more abundant. “Today, pipeline-delivered natural gas is less than 50 cents per gallon of diesel. This is compelling,” Wright added.
Affirming Wright’s argument is the fact that Henry Hub natural gas prices have remained low despite the conflict.
Massive LNG Expansion Underway
No wonder LNG is increasingly considered less a mere commodity and more as a strategic asset. Never has this status been clearer, as importing countries across Europe and Asia scramble to source cargoes from the U.S. and elsewhere to substitute for Qatari loads reduced by Iranian aggression.
Obviously, no single country can fill the need, and the market is destined to undergo a major supply deficit for some indeterminate time to come before balance is restored. But North America represents a bright spot thanks to an array of new projects and expansions already in development.
In the chart below, the U.S. Energy Information Administration tracks a dozen major North American LNG export projects scheduled for completion between now and 2029. Most of the projects – seven – are concentrated along the U.S. Gulf Coast, from Brownsville, to Corpus Christi, to Houston, Port Arthur, Lake Charles and farther east. Three others – Cedar LNG, Woodfibre LNG, and LNG Canada – will be based in Canada, with two more – Energia Costa Azul and Fast LNG Altamira – underway in Mexico.
If all 12 projects progress to completion, they would increase North America’s export capacity from its current 11 bcf/day to 28 bcf/day, more than offsetting the 10 bcf/day lost to the market due to Qatar’s outage.
This rapid build-out of new capacity is far from a spur-of-the-moment development. Rather, it represents years of careful planning and billions of dollars of private investment and infrastructure development in Texas, Louisiana, and along the Gulf Coast. The timing now aligns with heightened global demand caused by the disruption at Qatar’s Ras Laffan.
With its newly acquired expansion approval from the to expand exports, Venture Global’s CP2 LNG facility in Plaquemines, Louisiana stands to become the largest export complex in the U.S., reflecting the current urgency for and confidence in additional U.S. supply.
Again, the CP2 development is just one of a dozen major facilities in the development pipeline in North America today. Earlier this year, Cheniere submitted an application to build another LNG plant in Texas. The project would bring the yearly output of the U.S.’s largest LNG exporter to 60 million metric tons per annum.
Public Policy Key To LNG Capacity Growth
It is important to note that little, if any of this ongoing expansion would have taken place just two years ago under the year-long LNG export permitting “pause” invoked by the Biden administration, one which may have become a permanent feature of federal enforcement in a Kamala Harris presidency. How different would both the energy security of the U.S. and our allies be if that would have happened.
But instead of being mired in a pause, the LNG industry’s wave of investment is fueling broader infrastructure growth, economic expansion, and thousands of new, high-paying jobs across the U.S. energy sector. This boom could not be timelier as major events and trade uncertainties rumble on in the Middle East.
Whether one calls it a “superpower” as Secretary Wright does, or just a booming industry in the right place at the right time, one thing is clear: U.S. LNG is critical to our energy security, a national asset which is becoming an increasingly precious commodity across the rest of the world. Of all the various elements of U.S. energy growth, none illustrates the Trump “American Energy Dominance” agenda quite so prominently as America’s LNG does at this crucial moment.
