Shepstone Management Company, Inc.
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It’s no secret we run a trade deficit with China but, we may have found at least a partial solution with LNG. We’re an LNG exporter and they’re the market.
An article by Brian Wang on the website Next Big Future uses some interesting data from the Energy Information Administration (EIA) to make a fascinating point; China is on it way to being the world’s biggest market for LNG and the U.S. is headed toward being the No. 2 global exporter of the stuff. That sounds a lot like an opportunity to reduce our trade deficit with China, doesn’t it?
The EIA data shows we’re already more of a supplier than a consumer of gas on the world stage:
The United States was a net exporter of natural gas in the first quarter of 2018, with net exports averaging 0.5 Bcf/d. Rising LNG exports and pipeline exports have contributed to a shift from the United States being a net importer of natural gas as recently as the first quarter of 2017.
This chart summarizes the big picture:
Notice how the green is bending down overall as we are transitioning toward becoming a global supplier of natural gas. As the NextBigFuture article also notes, it is expected LNG will eventually make up about 14% of total U.S. natural gas production and should reach about 6% as quickly as 2020. LNG export facilities are now in operation or under development in several locations. The Cove Point facility near Baltimore will be especially well-suited to moving Marcellus Shale gas to foreign markets (and maybe even Boston, which ought to qualify given the wacky nature of their politics and the strange way they talk up there).
The EIA further predicts that global LNG exports will rise 30% by 2023 and the United States will become the world’s second-largest supplier of LNG earning us the Avis award for trying harder and positioning us for even bigger gains down the road or, perhaps should we say, across the pond.
The above chart show shows we are also gaining on exports by pipeline as more gas goes to Mexico but look at the light blue indicating how much LNG exports by ship are growing. It’s rather amazing. Now, take a look at these stats (emphasis added):
China will be world largest importer of natural gas in 2019.
China will increase natural gas imports by 60% between 2017 and 2023 to 376 billion cubic meters (International Energy Agency Forecast).
China’s liquefied natural gas imports will be up to 93 bcm by 2023 from 51 bcm in 2017.
China will expand gas storage capacity to meet increased seasonal needs during winters. China has about 10 billion cubic metres of storage space, or about 4% of its annual demand. Germany and Italy have capacity amounting to 25 per cent and 33% of demand.
Global gas demand will grow at an average rate of 1.6% a year, reaching just over 4,100 billion cubic meters (bcm) in 2023, up from 3,740 bcm in 2017.
These are astounding statistics and indicate the U.S., as the likely future second largest exporter of LNG, will have an enormous opportunity to sell to China, the largest importer. This means we’ll have the potential to put a nice dent in our trade deficit with China, creating all sorts of benefits here at home in places such as Bradford Susquehanna and Washington Counties, Pennsylvania, Moreover, this doesn’t reflect the trade deal President Trump just made with the E.U. to take a lot more of our LNG. Will a similar deal be made with China? I think we can count on it.
The post Can We Flip Some of Our Trade Deficit with China by Selling It LNG? appeared first on Natural Gas Now.
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