Energy research firm Rystad Energy forecasts a need for “rapid growth” in natural gas supply in order to meet continuing global gas demand, even as the U.S. Energy Information Association (EIA) reports that the United States broke records in natural gas exports in the first six months of 2023.
New Natural Gas Production Needed to Meet Demand
“Rystad Energy forecasts that even in scenarios of 1.9 – 2.5°C warming, with rapid growth in renewable energy sources, the current set of existing gas fields will not meet global demand, requiring rapid growth in unconventional gas supply.”
Source: Rystad Energy
Rystad touts natural gas as a “crucial stepping stone to a sustainable future” with its ability to provide affordable, reliable and responsible energy, even in aggressive emissions reduction scenarios. According to Aatisha Mahajan, Vice President of Exploration with Rystad Energy:
“Gas is increasingly considered a crucial stepping stone to a sustainable future. With reduced emissions and regional energy security goals aligned, gas is poised to play a pivotal role in the global energy transition.” (emphasis added)
Estimating that natural gas will increase to approximately one third of the world’s energy supply mix by 2030, Rystad claims that the Middle East will need to increase exploration and development to fill this growing demand. However, with the United States continuing to dominate global natural gas exports, domestic U.S. natural gas can and is able to play a significant role in helping close this forecasted gap between supply and demand.
U.S. LNG Leads Export Growth
New data this week from the EIA reported that the United States exported an average of 20.4 billion cubic feet per day (Bcf/d) of natural gas in the first six months of 2023; a record breaking amount for the first half of any year. The bulk of the growth in U.S. natural gas exports can be attributed to liquid natural gas (LNG) exports. U.S. LNG averaged 11.6 Bcf/d, solidifying the country as the top LNG exporter globally. This represents four percent growth compared to the first six months of 2022.
The United States also saw growth in natural gas exports by pipeline. Domestic exports to our North American neighbors, Mexico and Canada, saw a four percent increase in the first half of 2023 compared to the same period in 2022. Natural gas exports by pipeline also reached a monthly high in June of 2023 with U.S. pipeline exports topping off at 6.8 Bcf/d.
Source: Energy Information Association
American natural gas production helps bring down the cost of energy both at home and around the world. Crucially, contrary to earlier predictions, the LNG export boom has occurred without a corresponding increase in natural gas spot prices.
U.S. Natural Gas Grows Despite Opposition
This record-breaking growth in U.S. natural gas exports has occurred in spite of President Biden’s ‘war’ on domestic oil and natural gas production. Just last week, President Biden approved the lowest number of lease sales ever offered as part of the five-year federal offshore leasing program. This came on the heels of the Biden Administration canceling the remaining oil and gas leases in the Alaska Arctic National Wildlife Refuge. The administration has not enabled the distribution of natural gas across the country, either, often delaying approvals for pipeline projects that local consumers and workers support. This obstructionism is far more concerning when put in the context of growing global natural gas demand and the potential for insufficient resources to meet that demand.
Bottom Line: The United States continues to dominate in LNG exports, but more natural gas is needed to meet increasing global demand, even in aggressive decarbonization scenarios and as renewable energy continues to come online. Rather than that gas coming from the Middle East, home-grown, responsible and clean American natural gas can and should be utilized to meet the rising global demand for natural gas.
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