America may be world’s biggest LNG supplier in two decades

By 2035, the U.S. may have surpassed Australia and Qatar to become the world’s biggest supplier of liquefied natural gas, according to the chief executive officers of Canadian energy giant Enbridge Inc. and LNG exporter Tellurian Inc.

The U.S. already has about 70 million tons a year of LNG capacity coming online, Meg Gentle, Tellurian’s CEO, said in an interview at the CERAWeek by IHS Markit energy conference in Houston Wednesday. That compares with Australia’s 87 million and Qatar’s 82 million tons, respectively, she said. The world will meanwhile need another 20 million tons of new LNG supply a year installed over five years.

“The U.S. will be the cheapest source of new LNG, so we believe a lot of that 100 million tons will come from the U.S.,” Gentle said. That could “easily” hand the U.S. the biggest share of the LNG market.

This would be a monumental shift for America, which just a decade ago was facing declining gas production and was building terminals in anticipation of importing more of the fuel. The shale boom instead propelled U.S. supplies to record levels. Cheniere Energy Inc. became the first company to send a shale gas shipment overseas last year. U.S. cargoes have since landed everywhere from Mexico to China to Turkey.

“North America’s energy advantage extends from a unique combination of resources, the most advanced technologies being applied to those resources and the availability of capital,” Enbridge CEO Albert Monaco said at CERAWeek. “By 2035, it’s quite likely we are going to see the U.S. making up the largest market share of the LNG market.”

In fact, America’s LNG production may be growing too fast. A worldwide glut of the fuel, brought on by weakening demand in Asia and increasing supplies from countries including the U.S. and Australia, sent investments in new export projects to a 17-year low in 2016. Tellurian is betting that the market will eventually re-balance, setting the stage for a rebound after 2020.

The Houston-based company, co-founded by ousted Cheniere CEO Charif Souki, is developing an LNG export terminal in Louisiana known as Driftwood.

For more on the business case for LNG and how it’s reshaping the politics of global energy, read this QuickTake.

“Frankly, the fastest we can start construction is 2018, which means the fastest we can produce LNG is the second half of 2022,” Gentle said. “It is perfectly timed.”

Gentle said Driftwood has been in the design phase for most of the past year. Bechtel is almost finished with the engineering work, and Tellurian may submit an application for federal regulatory approval by the end of the month, she said.