Energy Prospectus

After six decades of relying on outside sources, the United States is poised to become a consistent net exporter of natural gas. The shale boom and the rush to embrace LNG has fueled the shift, one that will have significant consequences for natural gas prices around the world. In 2016, total U.S. natural gas imports reached 3 trillion cubic feet, the bulk of which came via pipeline from Canada. Month to month, natural gas imports hovered around 250 billion cf, according to data from the EIA. Exports, however, have been shooting up from less than 60 million cf in 2006 to 269 million in January 2017. The ratio of imports to exports has been falling for years, and 2017 will be the year that exports officially exceed imports for the first time since 1957. Global demand for liquefied natural gas has been a major factor in driving the trend, with LNG now accounting for 20 percent of all natural gas exports. The EIA expects this trend to continue, and in the Annual Energy Outlook for 2017 forecasts LNG driving overall American natural gas exports, with export capacity reaching 9.5 billion cf/d by 2021, once four new export terminals join Sabine Pass. While LNG and natural gas exports via pipeline are expected to increase, imports from Canada will slowly decline.

The United States' ability to export more and more gas each year will stabilize the U.S. natural gas market; removing the big swings in price caused by weather related demand (or lack there of). In 2017, the U.S. gas market is MUCH TIGHTER than it was a year ago. Cheniere Energy (LNG) will bring another LNG export "train" on-line this summer that will add even more demand. In my opinion, the "right price" for natural gas is in the $3.50 to $4.50 range. - Dan