Will Anything Slow Down The U.S. LNG Juggernaut?

It is the legally mandated purpose of a for-profit corporation to make money for its owners and to prioritize that goal above all else. So, it is no surprise that U.S. natural gas producers have been seeking relief from domestic prices that have generally hovered between $2 and $4 per thousand cubic feet for most of this decade.

Qatar Petroleum and Exxon Mobil Corp announced last week that they would be adding to investment in Texas in liquefied natural gas capacity for export from the United States, a move that was described as a response the immense volumes of gas coming from American shale deposits. With so many LNG projects being built and on the drawing board, will anything slow down the U.S. LNG juggernaut?

The fight over U.S. exports of natural gas is long since over. U.S. producers now have the right—like almost all other U.S. producers of commodities or manufactured products—to sell their products to the highest bidder wherever that bidder may be in the world.

U.S.-based industrial consumers of natural gas howled a bit when the federal government lifted restrictions on natural gas exports. But since then gas prices have maintained their ground-hugging trajectory.

This is in part because gas associated with the production of oil produced from similar shale deposits has continued to flood the U.S. market. But with the price of oil slumping and a reduction in the pace of drilling expected, that associated gas may not be so plentiful.

The irony is that falling oil prices may ultimately lead to a spike in U.S. natural gas prices. But if the pure natural gas shale plays are so productive, how can this be? The answer is quite simply that they aren't. And, that is the secret behind the next bull market in U.S. natural gas. It likely won't come as a result of demand for U.S. LNG so much as a surprise shortage of domestic gas.

A detailed 2018 analysis of U.S. shale gas plays summarizes the problem this way:

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Kurt Cobb is an author, speaker, and columnist focusing on energy and the environment. He is a regular ...

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