Liquefied natural gas (LNG) exports to Europe have more than doubled this year, and now account for almost three-fourths of total U.S. exports. The U.S. Energy Information Administration recently reported that the U.S. exported 74 percent of its LNG to Europe, compared to an average of 34 percent last year. The surge is largely due to the Russian invasion of Ukraine and the European Union’s decision to stop using Russia’s gas, which previously provided more than one-third of its total. The U.S. now accounts for 49 percent of Europe’s imports, while Russia and Qatar provide 14 percent each. Global energy markets have been roiled by the tight oil and gas supply, and prices have skyrocketed as economies around the world reopened following the COVID-19 pandemic, driving demand, with sanctions on Russian oil and gas sending prices for U.S. gas up further. The U.S. EIA’s short-term energy outlook expects the price of natural gas to be $8.69 per million Btu’s, more than doubling from last year. “Natural gas prices are rising mainly because of three factors: natural gas inventories that are below the five-year average, steady demand for U.S. liquefied natural gas (LNG) exports, and high demand for natural gas from the electric power sector given limited opportunities for natural gas-to-coal switching,” the EIA said. However, n 2023 the EIA expects the average price to fall to $4.74/MMBtu as production increases. An explosion in early June at the Freeport LNG liquefaction and export facility in Texas reduced U.S. export capacity by about 2 billion cubic feet a day, resulting in slightly lower gas prices as the gas stays in this country to replenish supplies. The facility does not expect to resume partial operations for at least three months. The U.S. is now the largest gas supplier to the EU and the United Kingdom, replacing Asia as the top destination. LNG exports to Asia declined by 51 percent in the first four months of the year. U.S. exports averaged 11.5 billion cubic feet a day in the first four months of 2022, an 18 percent increase from 2021. Appalachian natural gas producers have been pushing for additional LNG exports as a way to improve Europe’s energy situation and reduce CO2 emissions, as natural gas burns much cleaner than coal. Natural gas is moved through pipelines to LNG terminals, where it is supercooled into its liquid state, and loaded onto tanker ships that keep the gas cooled to be taken to overseas markets. LNG terminals are running at capacity and 25 new LNG plants in the U.S. have been proposed. However, a recent report from the Environmental Integrity Project determined that if all are built, they could release 90 million tons of greenhouse gases per year, raising questions about the climate consequences of the LNG boom.
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