LNG stands for Liquefied Natural Gas. It is a natural gas that has been cooled down to a very low temperature (-162°C or -260°F) to transform it into a liquid state. This process of liquefaction reduces the volume of the natural gas by a factor of around 600, making it easier and more cost-effective to transport over long distances using specialized tankers.
LNG is considered a cleaner-burning fossil fuel compared to coal or oil, as it produces less carbon dioxide and other pollutants when burned. It is used in various applications such as power generation, industrial processes, and transportation, among others.
In 2022, the US became the largest exporter of LNG in the world. According to U.S. Energy Information Administration's recent short-term outlook, liquefied natural gas exports will keep driving U.S. natural gas exports over the next two years.
The March 2023 outlook forecasts U.S. LNG exports will average 12.1 billion cubic feet per day (bcf/d) this year, a 14% increase compared with last year.Â
Exports could rise 5% in 2024 as LNG displaces Russian gas exports to Europe. Mild temperatures and fuller-than-average storage have reduced LNG prices this year, incentivizing price-sensitive countries to import more LNG from the U.S.
The Freeport LNG export terminal's return to service also supports the new forecast for more LNG exports. It produces 2.14 billion cubic feet of LNG on a peak day. Before last year's facility shutdown, exports averaged 1.9 billion cubic feet daily (bcf/d). Once all three trains at Freeport LNG return to service, exports could exceed 12 bcf/d, helping the U.S. retain its spot as the top LNG exporter.
The outlook also forecasts U.S. natural gas exports to grow by 0.5 billion cubic feet daily in 2024 as new pipelines in Mexico, including the Tula-Villa de Reyes, Guaymas-El Oro, and Mayakan pipelines, are slated to come online next year.
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On the date of publication, Andy Mukolo did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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