08.06 U.S. Natural Gas Export Boom

Over the next five years, the Unites States will likely become the largest exporter of natural gas in the world. A large portion of this export growth will be through liquefied natural gas (LNG).

Terminals in the Gulf of Mexico are scheduled to begin exporting LNG in the fourth quarter of 2015. Approximately 2 billion cubic feet (Bcf) per day will begin shipping in the fourth quarter, with another 1-2 Bcf per day shipping in the first quarter of 2016. By 2020, the United States could be shipping 10 Bcf per day. Considering the United States currently produces 74 Bcf per day, there will need to be a large uptick in the development of domestic natural gas over the next decade.

What has been largely over looked is the coming export boom of natural gas to Mexico. Via a pipeline operated by Kinder Morgan, the United States was already exporting 2 Bcf per day in March of 2015. Current plans call for investments in new pipelines of $7 billion raising exports by another 6.5 Bcf per day.

The combination of LNG exports and natural gas exports via pipelines could boost exports in excess of 15 Bcf per day for the United States in the coming decade. Natural gas prices in the United States are a fraction of what the rest of the world pays. With the ability to finally export natural gas to the rest of the world, the United States will be able to exploit its world class natural gas reserves for the coming decades.

Steve Titcomb, Investment Advisor, Echelon Investment Management