U.S. LNG exports will triple over the next decade, supported by the Inflation Reduction Act.
Increased demand for LNG
U.S. LNG exports are experiencing increased demand. The North American natural gas market will support 29 billion cubic feet per day of production from 2022 to 2033. Thus, according to Wood Mackenzie, the market could benefit from a tripling.
Dulles Wang, director of gas and LNG research for the Americas at Wood Mackenzie, says:
“The expansion of the North American gas market over the next decade will be the equivalent of adding two new Permian basins. As Europe diversifies to more secure sources of supply and international buyers around the world seek reliable, low-cost supply, North America is poised to deliver.”
Producers continue to focus on financial capital discipline. However, they will gradually increase their investments over the next few years to support market expansion.
Downward pressure
The resulting new offer will put downward pressure on gas prices. The decline will continue until LNG export facilities come on line towards the end of the decade. Thus, the objective is to create outlets to international demand centers.
Although growth will slow after 2030, various incentives included in the Inflation Reduction Act of 2022 will kick in. Indeed, the Inflation Reduction Act will support long-term demand for natural gas in North America. In addition, the measure will support carbon capture and storage and hydrogen.
