US trade group calls for restrictions on LNG exports

Author: Ruth Liao

2021/09/17

HOUSTON (ICIS)--The US trade group Industrial Energy Consumers of America (IECA), which represents industrial companies, urged the US Department of Energy (DOE) on Friday to restrict or limit LNG exports on concerns of rising gas prices.

IECA’s letter called on US Energy Secretary Jennifer Granholm to require US LNG producers to reduce exports to prevent price spikes this winter.

The industrial organisation also requested that the DOE place a hold on all pending export authorisations for new LNG export plants in the lower 48 states of the US.

A request from one trade group will unlikely make an immediate change to the Natural Gas Act (NGA), which is the framework for allowing US LNG export licenses.

The licenses are granted under a long-term basis to allow the LNG export plants to operate. Market pricing has not been a restriction for the production of LNG in the US, reflecting the government’s free-market principles. US LNG producers, in their various export license applications, have cited ample production figures underpinning supply for their export volumes.

The Henry Hub front-month futures price on the NYMEX has been trading at multi-year highs in recent weeks. The October ’21 front-month price closed at $5.34/MMBtu on Thursday.

The rise of natural gas prices increases the cost of natural gas liquids (NGLs), which are the feedstocks for petrochemicals and consumer plastics, the letter stated.

The US predominantly uses ethane as a feedstock to produce ethylene. Propane dehydrogenation (PDH) units convert propane into propylene.

The US has about 70m tonnes/year of LNG nameplate export capacity, with US producer Cheniere’s 4.5m tonne/year Train 6 at Sabine Pass in Cameron Parish, Louisiana, next to start online, as well as the early commissioning of Venture Global’s 10m tonne/year Calcasieu Pass in Lake Charles, Louisiana.

Average feedgas of about 10 billion cubic feet/day (bcf/day) across the existing six LNG plants makes up about 10% of the US marketed gas production, according to the US Energy Information Administration (EIA)’s 2021 estimate.

Prices in Europe and Asia have soared to record-high levels, as the ICIS Dutch TTF benchmark and the ICIS East Asia Index (EAX) for spot LNG cargoes have settled above multi-year prices. The TTF October ’21 November settled at $21.71/MMBtu on Thursday and the November ’21 was assessed at $23.45/MMBtu for Friday.

Thumbnail image shows natural gas burning. Photo by Shutterstock