July 3, 2022

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How are gas prices and projects moving in the US

In the United States, gas prices are rising above $9 per million British thermal units, the highest value since 2008. Meanwhile, demand for LNG is spurring projects, but inflation is raising labor and material costs. All the details

Last Thursday, for the first time since August 2008, contract prices (futures) of natural gas in the United States at more than $9 per million British thermal units (Btu). This is a problem, because the country’s inflation rate is already very high and an increase in the price of gas will have an impact on almost everything, from home heating costs to production costs in factories.

the reasons

According to David Givens, an analyst at Argus quoted CNBCThe reasons for this increase in fuel prices are three: lower production growth, higher levels of liquefied gas exports, and lower storage values, about 17 percent below the average of the past five years.

Source: Axios Explanation of FactSet Data.

What is the United States doing about exporting LNG?

In April – coinciding with the fall in demand for gas in the Northern Hemisphere, with the end of the cold season – Qatar again became the world’s number one exporter of liquefied natural gas, overtaking the United States, at more than 7.5 million tons.

Bypassing Doha in Washington restricted It also led to a decline in US production: companies operating export terminals took advantage of the end of winter to start working in factories.

According to analysts, once in operation Calcasieu Pass Station – located in Louisiana, is owned by the company Venture Global LNG By the end of the year, the United States will have a LNG production capacity of 13.9 billion cubic feet per day.

Also in Louisiana, Venture Global in recent days closed a $13.2 billion loan to build the Plaquemines project on LNG. It is the first approved stop in the country after the invasion of Ukraine increased demand for non-Russian gas supplies. The United States has achieved a an agreement With the European Union to supply it with 15 billion cubic meters of LNG in 2022.

Unlock projects

He said that European demand for LNG is strong Reuters, gives fresh impetus, in the United States, to some long-stalled export projects. The problem is that the cost of labor, equipment, and materials (primarily steel and nickel) is too high due to inflation, so the development of these plants will be complicated.

New Model Designs

There is also a topic of technological advancement: Long-running projects can have much higher construction costs than newer ones, which use modular designs that are intentionally designed to be faster and cheaper to assemble.

For example, New Fortress Energy uses Baker Hughes modular liquefaction units. At the aforementioned Calcasieu Pass, Venture Global is installing eighteen modular units: the intervention cost is $580 million per ton of LNG, 26 percent cheaper than the first export facilities.

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