NatGas Price Spikes On EU Stand Against Russia

US natural gas prices surge as Europe turns away from Russian energy; Benchmark more than doubles from past decade’s average as exports grow and producers hold back

Derek Brower, May 4, 2022 (Financial Times)

“The US economy’s long era of cheap shale gas is showing signs of fading, with prices hitting the highest in more than a decade and Europe and Asia ready to pay more to import American supplies…[The rising Henry Hub natural gas benchmark is] far above the $3 average of the previous 10 years. A persistent source of demand are plants that liquefy the gas for export overseas. The coastal facilities, a critical piece of Europe’s plans to cut Russian supplies after Moscow’s invasion of Ukraine, have been running at maximum capacity during the rally…

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…Shale gas producers, whose headlong growth in the 2010s depressed prices and made US liquefied natural gas export projects viable, have also been slow to increase output in response to the market surge…[Demand from LNG plants has leapt] since the start of March…More shipments are anticipated this year as Cheniere Energy expands an export plant in Louisiana and rival Venture Global opens one in the state. The Energy Information Administration forecasts LNG exports, which began on the Gulf of Mexico in 2016, will increase another 25 per cent between 2021 and 2022…

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…[NatGas in the US remains far cheaper than in Europe and Asia, and the] disparity creates an incentive to add more export plants…The US and EU recently signed an agreement in which the US would to ship 50bn cubic metres a year of added LNG to Europe by 2030, almost 50 per cent more than the US’s current export capacity. The extra LNG demand comes as US electricity consumption is on the rebound, driving domestic gas consumption. Combined with sluggish production growth from shale gasfields, it has left US gas stockpiles at their lowest seasonal level in three years and well below the five-year average…” click here for more

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