The LNG sector is poised for gains from the incoming Trump administration, which is expected to take aim at a moratorium on export licenses. We have raised our outlook for LNG exports in the Macro Supply & Demand report and expect more projects to reach a final decision.
The Biden administration released its updated LNG export study on December 17, finding that unrestricted LNG exports could increase greenhouse gas emissions, raise the price of natural gas by 30%, delay the global transition from hydrocarbon energy to renewables, and raise general public interest and environmental justice concerns. The DOE made no recommendations on policy changes. The study now moves to a 60-day comment period, which runs beyond the date when President-elect Trump enters office.
East Daley Analytics expects the new administration to disregard or potentially unwind the study. During the campaign, Trump vowed to end the pause on export licenses and swiftly review pending LNG projects. Industry veteran Chris Wright, Trump’s selection for DOE Secretary, is also a vocal advocate for supply growth and exports.
The incoming administration could broadly reaffirm the public benefits of LNG exports and end the pause, reverting to the former review process for countries without free trade agreements (non-FTA). Alternatively, Trump’s Office of Management and Budget (OMB) could step in and rescind the assumptions around the study’s cost/benefit analysis. Under this scenario, a political assistant director (PAD) at OMB could work with DOE to amend or reject the report’s conclusions.
A friendlier regulatory environment will be welcomed by sponsors of LNG projects still short of a final investment decision (FID). In the January ‘25 Macro Supply & Demand report, EDA adjusted our base case assumptions to include Venture Global’s CP2 project and Kimmeridge-backed Commonwealth LNG into the ‘Expected Full FID’ case due to the more favorable outlook.
CP2 and Commonwealth still have work ahead to receive the crucial non-FTA permit and reach FID. Historically, a project can be expected to reach FID when it signs at least 80% of its capacity to binding Sale and Purchase Agreements (SPAs). CP2 still needs 0.9 Bcf/d in SPAs, and Commonwealth needs nearly 0.6 Bcf/d of new commitments to reach that 80% threshold.
Including CP2 and Commonwealth in our ‘Expected FID’ case raises EDA’s long-term LNG demand forecast (see figure). We model total LNG demand to reach 29.2 Bcf/d by late 2030 (purple line in the graph). The Conservative Case in dark blue replaces our base case assumptions from last month and has LNG feedgas reaching 25.7 Bcf/d in late 2030 (dark blue line).
Looking beyond 2030, we expect several other facilities to gain commercial momentum. In December, Energy Transfer (ET) signed a 20-year SPA with Chevron for 2.0 Mtpa at the Lake Charles LNG facility, the first new contract in over two years. Lake Charles LNG needs another 3.5 Mtpa or 0.46 Bcf/d of commitments to reach the 80% threshold.
Woodside’s Louisiana LNG (formerly Tellurian Driftwood) said that it expects to make FID in early 2025. The facility signed an EPC contract with Bechtel in Dec ‘24, but still lacks the offtake agreements to realistically make FID. Cheniere’s Sabine Pass Expansion (~2.7 Bcf/d export capacity) has potentially 40% of its offtake volumes already contracted via Cheniere’s Marketing arm, although the facility still needs its DOE non-FTA permit.
Projects still under DOE review include Commonwealth, CP2, NFE Louisiana FLNG, Port Arthur Phase 2 (1.91 Bcf/d), Gulf Stream LNG, the Corpus Christi Midscale Expansion, Lake Charles LNG, Magnolia LNG, and the Sabine Pass Expansion. – Jack Weixel and Oren Pilant Tickers: ET, LNG.
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