The U.S. LNG industry centered on the Gulf Coast has led to rocketing increases in the country’s natural gas demand since Lower 48 exports began from Louisiana in 2016, according to the Energy Information Administration.
Even as severe seasonal heat events have increased in frequency and unconventional natural gas production has given rise to regional increases in natural gas-fired generation across the United States, the EIA’s latest analysis shows liquefied natural gas is still driving the biggest increases in demand.
From 2012 to 2022, U.S. gas demand increased 43%, or by 34.5 Bcf/day. EIA analysts ascribed almost half of that additional demand to states that have become host to the majority of the country’s LNG export terminals.
“Demand in the Gulf Coast states of Louisiana and Texas grew by 116%, or 16.0 Bcf/d, driven largely by increased demand for feed gas for LNG exports,” analysts wrote.
In 2022, Texas and Louisiana made up 26% of the nation’s natural gas demand. The rest of the southern United States accounted for 29% of the country’s gas demand.
U.S. export capacity has drastically increased since Cheniere Energy Inc.’s Sabine Pass LNG facility in Louisiana sent out its first cargoes roughly seven years ago. The EIA projects U.S. export facilities have a combined capacity of 11.4 Bcf/d, with an additional 7.3 Bcf/d under construction.
Around 18 Bcf/d of projects have received regulatory approval from the U.S. Department of Energy and the Federal Energy Regulatory Commission, but have yet to reach a final investment decision. The majority of the proposed projects are sited either in Texas or Louisiana.
The year has been shaping up as a hot one for new long-term LNG agreements to support those future terminal projects. U.S. exporters have signed around 22 million metric tons/year worth of contracts and tentative deals so far, according to Tudor, Pickering, Holt and Co.
The EIA’s analysis of the LNG industry’s role in U.S. gas demand closely follows its report earlier in the month on how exports will influence Henry Hub prices through 2050.
While second to the increase in demand from LNG exports, the U.S. power sector has attributed to significant increases in gas demand, especially in the last five years. The EIA reported increasingly severe summer heat waves impacting most U.S. regions since 2019 have spiked power demand as utilities grow their reliance on natural gas.
The Midwest saw a 35% increase in gas consumption over the decade as the region’s electric power sector increased consumption by 2.3 Bcf/d, more than double 2012 levels. Gas-fired generation also drove natural gas consumption in the Northeast by 36% between 2012 and 2022.
