LNG exports are the main engine driving growth in US natural gas demand, supported by strong global interest and low domestic prices. East Daley Analytics bakes into our outlook significant gains from LNG facilities with a final investment decision (FID) already in hand. However, just as important are those less-mature projects also likely to advance.
Beyond the eight commercially operating LNG facilities in the US, we are tracking 15 LNG projects that have already reached FID and advanced to the construction or commissioning phase. This group, shown in orange in the chart below, is on track to effectively double feedgas demand, from ~20 Bcf/d currently to 40 Bcf/d by 2035.
Another group includes those LNG projects at the pre-FID stage. These developers must still demonstrate that a new LNG facility can support billions in capital investment. That task requires financing agreements with lenders, permits from multiple state and federal agencies, and signing sufficient long-term offtake agreements.
In the Macro Supply & Demand forecast, East Daley currently includes demand from eight LNG projects in this ‘Expected FID’ category. They represent 13.8 Bcf/d in peak operating capacity, or ~97 Mtpa of LNG exports. LNG facilities typically operate at an average utilization rate of 93% over the course of a year. Based on that utilization, we expect incremental feedgas demand of ~12.8 Bcf/d from pre-FID projects, shown in yellow in the figure.
We weight projects based on several factors: the percentage of capacity contracted under sales and purchase agreements (SPAs); whether a project is a brownfield or greenfield expansion; the permitting status at the Federal Energy Regulatory Commission (FERC) and Department of Energy (DOE); selection of an engineering, procurement and construction (EPC) contractor; and a developer’s track record of execution.
The chart at right includes the pre-FID projects East Daley expects to move forward. For example, we credit Cheniere Energy’s (LNG) proposed Sabine Pass Train 7 expansion, due to the company’s strong reputation as a developer and the project’s location at the Sabine Pass facility. Cheniere also has made advanced commercial progress, signing over 90% of Train 7’s planned offtake under contract.
In contrast, Glenfarne’s Magnolia LNG is on our “long list” of projects that are less likely to start in the next 10 years. Magnolia’s original license to export to countries without US free trade agreements (non-FTA) expired in 2023, the project has required multiple FERC permitting extensions, and Glenfarne to date has announced no binding SPAs.
Combined with operating facilities and projects already under construction, East Daley’s ‘Expected FID’ projects push US feedgas demand to over 50 Bcf/d by 2035. The gas market is on pace to grow rapidly regardless, but billions more in upstream and midstream investments will hinge on the success of this group. – Emily Cecchini Tickers: LNG.
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