Striving to sell surplus gas production abroad, net natural gas exports from the United States exceeded 12 Bcf/d for the first time on March 30, according to the U.S. Energy Information Administration (EIA).
The rise in net gas exports from the Lower 48 states is facilitated by several new liquefaction trains in the Gulf of Mexico and lower exports from western Canada to the United States. Higher year-over-year natural gas production in the United States also reduced the need for natural gas from Canada, and a mild winter decreased the need for LNG imports into the United States.
As a result, net natural gas exports are up from about 9 Bcf/d in early January 2020 to about 12 Bcf/d as of March 30, 2020, EIA analysts noted.
LNG was the fastest growing source of gas demand in the U.S. last year, followed by gas demand for power generation. Feedstock needs for liquefaction and export plants increased by more than 2 Bcf/d, or 68%, the EIA EIA’s Natural Gas Storage Dashboard shows.
Rising gas use for power gen
Natural gas use for power generation is a key part of the natural gas supply and demand balance, even in winter, analysts underlined. Gas-burn in the power sector averaged about 28.4 billion cubic per day (Bcf/d) from the start of November 2019, until the end of January 2020. That is an increase of 3 Bcf/d, or 12%, compared with the pre-year period.
Power burn, estimated based on S&P Global Platts data, reached 34 Bcf/d on January 20, 2020—the second-highest natural gas use for power during a day in the winter.
Gas gained the upper hand over coal this winter, as spot gas prices at Henry Hubs fell to lows not seen since 2016. Mild winter weather lowered gas demand for heating and reduced pipeline congestions, freeing up plenty of cheap fuel for operators of gas-fired power plants.
New high-efficiency combined-cycle power capacity also adds to the attractiveness of generating electricity from natural gas. U.S. utilities added 8,843 MWgas-fired capacity last year and another 18,648 MW in 2018, according to EIA figures. At the same time, nearly 12,400 MW of coal-fired capacity was retired, mainly ageing and less energy-efficient plants.