Published: February 10, 2025
By Concentric Staff Writer
Key takeaways
—The new administration of President Donald Trump is reversing policies of President Joe Biden regarding liquified natural gas, such as a U.S. Department of Energy decision almost a year ago to halt permits for new LNG export facilities, which Trump did away with on his first day in office.
—The war between Russia and Ukraine is leading Europe to seek natural gas supplies elsewhere, prodding production in the U.S., where LNG export capacity is set to double with the construction of new export facilities.
—U.S. House Republicans and others had resisted the release last month of a U.S. Department of Energy Report saying that increasing U.S. export capacity would drive up domestic prices and increase greenhouse gas emissions.
Introduction and body
The dynamics around liquified natural gas (LNG), a major U.S. energy export, have been in flux. We are now observing the impact of President Donald Trump and his immediate reversal of the actions taken by President Joe Biden that froze permits for new LNG export terminals.
Biden’s focus had been on mitigating LNG exports in the name of climate change, while Trump stands in sharp opposition to that viewpoint for the U.S., the world’s number one exporter of LNG.
Trump on Jan. 20 reversed the Biden Administration’s pause on LNG exports with an executive order, part of his “Unleashing American Energy” initiative. The move drew praise from natural gas producers.
“There is the initial positive impact of putting people back to work not only with LNG transport, but with the existing ongoing LNG construction sites that are currently under contract but were paused by Biden, as well as several projects that had been permitted and will now be financed and the construction work allowed to begin,” James Flores, CEO, Sable Offshore Corp., said in an online post promoted by DOE.
Flores said the move would cause a wave of LNG exports that would help balance a trade deficit and strengthen America’s energy security.
Additionally, Trump on Feb. 1 announced a 25-percent tariff on imports from Canada and Mexico and 10-percent on Chinese imports to address what he called “an emergency situation” at U.S. borders posed by “illegal aliens and drugs, including deadly fentanyl.”
Trump then put a 30-day pause on the new tariffs a few days later after public statements from Mexican President Claudia Sheinbaum and Canadian Prime Minister Justin Trudeau that they would bolster border security.
China quickly retaliated with tariffs of its own, including a 10-percent tariff on U.S. coal and LNG, to take effect Feb. 10.
U.S. LNG exports rose since halfway through 2024, according to data from the U.S. Energy Information Administration, rising from 356,423 million cubic feet in June 2024 to 376,065 million cubic feet in November.
The LNG export price also rose during that time, from $6.57 per thousand cubic feet to $6.70 per thousand cubic feet between June 2024 and November 2024, according to EIA.
Biden’s efforts to slow U.S. exports faltered when Judge James Cain of the Western District of Louisiana, a Trump appointee, in July put a stay on the Biden LNG export ban, ruling on a request from 16 states. Cain argued that DOE had ignored the stay’s impact on national security, state revenues, employment opportunities, funding for schools and charities, and pollution allegedly caused by increased reliance on foreign energy sources.
In December, Biden’s DOE released a study saying that large amounts of LNG exports will drive up domestic energy prices and thwart greenhouse gas-reduction goals, including development of wind and solar generation.
Republicans in the U.S. House of Representatives pushed back on both Biden’s moratorium and the study. In February 2024, 150 House Republicans called for Biden to reverse his moratorium, saying it is “economically and strategically dangerous and unnecessary.” Noting that other countries are looking for supplies outside of Russia, the moratorium reduces national security and puts strategic markets at risk, the elected officials said.
“Your administration should do everything it can to encourage greater production of clean-burning and reliable natural gas, and to grant the export permits that allow access to global markets,” a Feb. 4, 2024 letter to Biden from the House Republicans says.
The debate occurs as North America’s LNG export capacity is due to more than double between 2024 and 2028, from 114 billion cubic feet per day (Bcf/d) in 2023 to 24.4 Bcf/d in 2028, based on current construction plans, according to EIA data. Over that period, export capacity is projected to grow by 0.8 Bcf/d in Mexico, 2.5 Bcf/d in Canada, and 9.7 Bcf/d in the U.S. from 10 new projects that are currently under construction in the three countries.
Five LNG export projects with a combined export capacity of 9.7 Bcf/d are under construction in the U.S., including Venture Global’s Plaquemines Phase I and Phase II in Port Sulphur, Louisiana and Cheniere Energy’s Corpus Christi Stage III on the Gulf Coast in Texas, both of which began producing LNG in December.
There are also other LNG projects in the works, including QatarEnergy and ExxonMobil’s Golden Pass, NextDecade’s Rio Grande (Phase I), and Port Arthur (Phase I), all in Texas.
Natural gas is also flowing from the U.S. via the Sur de Texas-Tuxpan pipeline to Mexican floating LNG terminals such as the Fast LNG Altamira and Energía Costa Azul LNG export terminal (0.4 Bcf/d export capacity) in Baja, California in western Mexico. Phase II of the later project is due to expand by 1.6 Bcf/d. Five other projects are proposed on the west coast of Mexico, with a combined capacity of 4.5 Bcf/d, according to the EIA.
In the North, gas from western Canada will supply three proposed projects with a combined capacity of 2.5 Bcf/d in British Columbia on Canada’s west coast. They include LNG Canada (export capacity 1.8 Bcf/d) with a plan to begin LNG exports from Train 1 in the summer of 2025; Woodfibre LNG (export capacity 0.3 Bcf/d) with exports beginning in 2027; and Cedar LNG, the nation’s first indigenous-owned project with a capacity of 0.4 Bcf/d, due to begin exports in 2028. Canada has authorized four other LNG expansion projects with a combined capacity of 4.1 Bcf/d.
The relationship between domestic production, imports, and exports have shifted as the production environment in the U.S. has changed. The shale gas boom of the late 2000s reversed trends and led to efforts to reactivate dormant import facilities, some of which were transferred to export beginning in 2016, according to S&P Global. U.S. export capacity sat at 13 bcf/d in 2024, with exports going to Europe, South America, Asia, and North Africa.
The value of LNG exports has exceeded others such as soybeans, corn, and even movies and television entertainment.
DOE’s study issued in December is intended to “provide an updated understanding of the potential effects of U.S. LNG exports on the domestic economy, U.S. households and consumers; communities that live near locations where natural gas is produced or exported; domestic and international energy security, including effects on U.S. trading partners; and the environment and climate,” the agency said.
There is “inherent uncertainty” regarding the state of U.S. LNG exports through 2050, the study says, which added the effort is not intended to be a forecast but rather explore a range of scenarios. DOE is responsible for authorizing exports of LNG under the Natural Gas Act. By 2050, projections of U.S. LNG exports exceed the export volume from LNG projects in operation or under construction, the agency said.
Globally, the market for LNG has been increasing in recent years and re-gasification and import infrastructure is being built, although future demand is uncertain and centers of demand are shifting, DOE said. Overseas countries include LNG as part of their strategies because it supports dispatchable power generation, often from existing infrastructure, which also leads to their policies driving U.S. export dynamics. Europe has been the primary destination for U.S. natural gas historically.
In Europe, policies reducing the usage of fossil fuels, including natural gas, could come into play, but demand for gas and LNG from Asia is expected to increase. By 2050, China is expected to be the largest LNG importer, according to the DOE study.
In analyzing the economic impact of new LNG projects in the U.S., DOE said, “natural gas production and the development of natural gas export infrastructure tends to increase employment in regions and communities where it occurs, but some evidence indicates that jobs often go to people who either move to the area for the jobs or commute from other areas, rather than to long-term residents.”
The U.S. has been a net exporter of LNG since 2016, when the first export terminal in the lower 48 states began operation. Average annual U.S. nameplate export capacity increased from 1.0 Bcf/d in 2016 to 11.9 Bcf/d in 2023, DOE said.
LNG demand growth in the first half of 2024 was driven by double-digit growth in China and India, but the outlook demand is “fragile,” according to the International Energy Agency. The second quarter of 2024 was marked by slacking global LNG production and price volatility. Asian demand was forecast to push up 2024 global demand by 2.5 percent, IEA said.
“Geopolitical instability represents the greatest risk to the short-term outlook. LNG trade has practically halted across the Red Sea since the start of the year, while Russia is increasingly targeting energy infrastructure in Ukraine, including underground gas storage facilities,” IEA said in its quarterly Gas Market Report.
Asia accounted for about 60 percent of the increase in global gas demand over the first half of 2024, with demand increasing by about 10 percent in both China and India.
Production-wise, global LNG supply growth was a scant 2 percent in the first half of 2024. LNG output fell in the second quarter by .5 percent or .5 billion cubic meters (bcm). This was the first quarter-over-quarter decline since Covid-19 lockdowns crippled LNG demand and caused the cancellation of cargos. Feed gas supply issues and unexpected outages drove production declines in the second quarter. But the expansion of U.S. export capability accelerated LNG supply capability in the second half of 2024.
In North America, residential and commercial demand weakened in the first quarter of 2024 because of unseasonably mild weather, but growth in natural gas-fired power generation offset this. Low gas prices in the early part of the year led U.S. upstream suppliers to cut dry gas output, damping gas production downward by 1.5 percent in the U.S. in the second quarter of 2024.
The war in Ukraine is leading European countries to push to diversify their natural gas supply, spurring interest in new projects such as a $44 billion natural gas pipeline in Alaska that would run between the North Slope and Nikiski, along the shore of Cook Inlet.
State corporation Alaska Gasline Development Corp. is leading an effort to develop the pipeline, recently announcing a contractual agreement with Glenfarne Group LLC, according to Alaska Public Media. The 800-mile project has been in the works for decades with its prospects fluctuating depending on costs and demand dynamics. Gov. Mike Dunleavey said that the Trump administration will be more accommodating to the project compared with Biden.
Background information
This article drew on sources such as the U.S. DOE, corporate websites, S&P Global, U.S. House documents, the U.S. Energy Information Administration, the International Energy Agency, and Alaska Public Media.
Links to cited sources
President Donald Trump Jan. 20 executive order
President Donald Trump Feb. 1 executive order
EIA data: U.S. Natural Gas Exports and Re-Exports by Country
Feb. 24 letter to President Joe Biden from U.S. House of Representatives Republicans
U.S. DOE Study: Energy, Economic, and Environmental Assessment of U.S. LNG Exports
— All views expressed by the author are solely the author’s current views and do not reflect the views of Concentric Energy Advisors, Inc., its affiliates, subsidiaries, related companies, or clients. The author’s views are based upon information the author considers reliable at the time of publication. However, neither Concentric Energy Advisors, Inc., nor its affiliates, subsidiaries, and related companies warrant the information’s completeness or accuracy, and it should not be relied upon as such.