The Current US Supply/Demand Outlook
Gas production in the US is forecast to increase substantially during the coming years, from approximately 500 Million tonnes per annum (mtpa) in 2013 to 583 mtpa in 2023. This will result in the US approaching self-sufficiency in Natural Gas requirements and also entering the LNG export arena.
Most of the current deficiency in US natural gas supply is met by imports via pipeline from Canada, with smaller amounts from LNG imports (Trinidad).
Canadian imports in 2013 should be about 63 mtpa, with this amount decreasing to about 43 mtpa by 2023. Small amounts of cross-border (Mexico and Canada) imports will continue into the future due to location basis advantage.
|US Gas Supply / Demand *||2013||2023|
|US Domestic Gas production||500 M tonnes||583 M tonnes|
|Canadian pipeline imports||63 M tonnes||43 M tonnes|
|Other imports||4 M tonnes||4 M tonnes|
|US Domestic Gas consumption||532 M tonnes||559 M tonnes|
|US pipeline Gas exports||33 M tonnes||52 M tonnes|
|US LNG exports||0.6 M tonnes||18 M tonnes|
* Source EIA 2013 outlook. Small discrepancies due to volumetric conversions at different temperatures, rounding and differing reporting requirement formats.
The figures presented in the above table are using the reference case for growth (2.5% growth rate). Obviously these figures will change if a higher or lower rate of growth is experienced.
Until the US begins exports in 2015/2016, US prices may remain subdued as domestic production will exceed demand. Currently (July 2013) there are applications for in excess of 224 million tonnes per annum of LNG exports from the US, but only 27 mtpa approved so far to non-FTA countries (ie, Where most of the demand is). Regardless of the number of applications, there simply isn't enough surplus natural gas in the US to meet the requirements of all these applications (at least without significantly reducing supplies to the local US market). This suggests robust competitiveness in the US for the surplus gas supplies as time progresses.
From the figures presented in the above table, the EIA only expects to see about 18 million tonnes of domestically (US) sourced exports of LNG by 2023. There is scope for the reduction of imports from Canada to still be routed through the US piping system and liquefied at US facilities, so another 20 mtpa could be added to the total figure as we approach 2023.
The US will no doubt be a competitive presence, but it is unlikely to dominate or significantly upset the terms of trade for the LNG marketplace.
BP is expecting world energy requirements to grow by 2% per year until 2020 and then by 1.3% per year to 2030. This means the world needs to find an additional 18% increase in current energy supplies to meet the expected demand by 2023. The huge growth in US gas supplies represent a 17% increase in US natural gas supplies, but most of this will be used domestically.
The increased shale gas supplies and possible US exports are therefore a welcome addition to dwindling global supplies and increased demand in the rest of the world, but is a drop in the ocean compared to what will be required.
Conversion factors used
1 billion ft3 = 0.021 Million tonnes LNG