The Outlook for U.S. LNG Remains Optimistic as 2024 Draws to a Close

Venture Global commenced shipping initial cargoes from their new liquefied natural gas (LNG) export facility in Louisiana recently, marking the commencement of operations. This plant, situated in Plaquemines, has the potential to become the largest LNG export facility in the United States if everything goes as planned. According to Bloomberg, the inaugural cargo departed on December 26 and is destined for German utility firm EnBW, expected to reach its destination in early January.

Likely Lifting of Biden's LNG Export Restraint

The inception of this newest LNG export terminal occurred just ten days following the publication of a report by the Department of Energy suggesting that the expansion of the growing LNG industry would result in increased greenhouse gas emissions. This report was accompanied by a statement from Energy Secretary Jennifer Granholm asserting that unrestricted LNG exports might lead to domestic natural gas shortages and higher costs for American consumers.

This DOE report met with mixed opinions and is not anticipated to have a significant impact during President-elect Donald Trump's second term. Trump has declared his intention to discontinue the "pause" in approvals for new LNG export terminals, initiated by President Joe Biden as one of his initial actions in office, and has promised to expedite permitting for various energy-related projects, including proposed new LNG terminals.

When she addressed the CERAWeek conference in Houston in March, Secretary Granholm expressed her belief that the permitting pause would likely be "well in the rearview mirror" by the time the meeting took place in March 2025. However, it appears that Granholm and the current President have opted not to realize this prediction, but it is widely speculated that Trump will fulfill their intention.

S&P Global Study Fortifies Trump's LNGPosition

A new study by S&P Global is expected to bolster Trump's efforts to stimulate further growth within the domestic LNG industry. This report, published a day after the DOE report, highlights numerous economic advantages that could ensue from continued expansion.

According to S&P Global Vice Chairman Daniel Yergin, some of the benefits outlined in the report include:

The US LNG industry is projected to augment its US economic impact by double to 2040.
A contribution of $1.3 trillion to GDP, supporting an average of 495,000 direct, indirect, and induced US jobs.
Revenues of $2.5 trillion for US businesses, expenditures surpassing $900 billion, tax income exceeding $165 billion, and an additional $250 annually per US household due to LNG exports.
LNG exports are capable of meeting the energy requirements to heat over 80% of EU households for a year.
LNG exports and feedgas contribute to a doubling in crude and natural gas liquids (NGLs) volume, thereby bolstering domestic manufacturing and other demands.

The S&P Global study also disputes Granholm's concerns that continued export growth will result in higher domestic gas prices, concluding that lifting the Biden-era restrictions and allowing markets to operate freely would result in less than a 1% increase in consumer prices. Additionally, Yergin stresses that regulatory and legal uncertainty created by Biden's pause and negative policy actions threaten significant growth, such as over $250 billion in potential GDP and over 100,000 future jobs.

“If US export growth potential were not to materialize, 85% of the resulting gap would be covered by fossil fuels from outside the US,” Yergin notes.

LNG Exports Now a Crucial Geopolitical Asset

Yergin highlights the fact that "US LNG supplies were promptly deployed during the European energy crisis during the Ukraine-Russia war." Ironically, this reaction to the Russian invasion of Ukraine and subsequent curtailment of Russian gas supplies into Europe was both supported and encouraged by Biden. Just a few weeks into the ongoing conflict, Biden made a visit to Ukraine where he made significant commitments on behalf of the US LNG industry to satisfy European gas needs without prior consultation with its leading companies.

Yergin underlines that "US LNG adds a new dimension to the US's global influence and geopolitical position,” largely due to its ability to rapidly address pressing needs. However, the transformation in the Biden administration's stance towards this vital US industry from positive to negative over the past two years has been striking and difficult to comprehend.

Regardless of this shift in the existing presidency's stance, Yergin emphasizes that, "LNG has become a fundamental part of the global energy transition, complementing the accelerated growth of renewables, reducing oil and coal consumption, and promoting decarbonization in developing countries."

Conclusion

As a new president prepares to be sworn in on January 20, the federal government's stance towards LNG exports and natural gas as a commodity seems to be poised to switch back to an undeniably optimistic one. The new administration will undoubtedly work to dismantle the regulatory and legal uncertainty created by political maneuvering and the political posturing of Biden and his appointees.

As 2024 comes to a close, the future for this versatile strategic commodity appears exceptionally promising. As Barack Obama famously stated in a meeting with congressional Republicans early in his first term as President, "elections have consequences." Nowhere will the consequences of this recent election be more evident than in relation to America's natural gas industry.

Secretary Granholm's prediction of the permitting pause being "well in the rearview mirror" by 2025 may not materialize, as President Trump intends to reverse Biden's LNG export terminal approval restrictions.
S&P Global Vice Chairman Daniel Yergin's report concludes that lifting the Biden-era restrictions on LNG exports and allowing markets to operate freely would result in less than a 1% increase in consumer prices.
The S&P Global study also suggests that failure to allow LNG export growth could result in a gap of over $250 billion in potential GDP and over 100,000 future jobs.
Yergin highlights the crucial geopolitical role of LNG exports, citing the rapid deployment of US LNG during the European energy crisis during the Ukraine-Russia war, a situation supported and encouraged by President Biden.
The geopolitical significance of LNG exports extends beyond energy, as they contribute to the US's global influence and position by rapidly addressing pressing needs.