US natural gas futures were trading around $3.7/MMBtu after falling as low as $3.4 during the previous session. The lowest level since June 2021.
Due to weaker demand and as gas production approaches record levels once again, US natural gas prices have declined by more than 10% since early 2023. This marked the worst start from the year to date.
In addition, the Texas Freeport LNG export facility, which had to close in June due to a fire, postponed its return until the second half of January, adding supply to the domestic market.
Also, dealers are concerned that the facility won’t come back online until the first quarter or two because more work will need to be done to satisfy federal regulators.
It is unlikely that anyone would want to develop export terminals even if LNG exports were allowed. In the last ten years alone, Shell/TransCanada has attempted to obtain permits for a five-year, $27 million LNG import facility off the coast of New York. Still, they were completely unsuccessful and had no results to show for their efforts. (At the time, the project was anticipated to lower energy prices for the US consumer, but NIMBYism prevented that from happening.)
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13 LNG import terminals and 0 LNG export terminals are now in the US. It would take 5-10 years before the first cubic foot of gas was liquefied if all the major oil companies and pipeline operators began to build an export terminal today. At that time, the market economy could be completely different. All those import terminals become obsolete liabilities in less than ten years.
The fact that most oil wells also generate some gas is an additional factor influencing the price. This means that an increase in the supply of oil must necessarily result in a decrease in the supply of gas. Which has the unintended consequence of increasing gas supply when demand for oil increases. The key point is that numerous elements work together. Keep gas costs below oil prices. Although there are many other challenges related to storage, transportation and seasonal demand.
The United States opposed the Nord Stream 2 pipeline. Mainly because it would allow Gazprom to supply more natural gas to Europe bypassing the Ukraine (which, from the Russian perspective, is problematic). Most of the other pipelines are already operating at capacity during the winter demand peak. And they can significantly undermine American competition if they choose.