Infrastructure – The LNG sector is poised for gains from the incoming Trump administration, which is expected to take aim at a moratorium on export licenses set by current President Biden.
The Department of Energy (DOE) released its updated LNG export study on December 17, finding that unrestricted LNG exports could increase greenhouse gas emissions, raise the price of natural gas by 30%, delay the global transition from hydrocarbon energy to renewables, and raise general public interest and environmental justice concerns. The study now moves to a 60-day comment period, which runs beyond the date when the new Trump administration takes over.
East Daley expects the new administration will unwind the study. During the campaign, Trump vowed to end the pause on export licenses and swiftly review pending projects. Trump’s Office of Management and Budget (OMB) could step in and rescind the assumptions around its cost/benefit analysis. Under this scenario, a political assistant director (PAD) in the Office of Management Budget (OMB) could work with the DOE to reject the report’s conclusions and revert to the former review process for countries without free trade agreements (non-FTA), or conduct a new study.
A more friendly regulatory environment will be welcomed by the sponsors of LNG projects still short of a final investment decision (FID). East Daley tracks these in the Macro Supply & Demand Report. For example, Venture Global’s CP2 project and Kimmeridge-backed Commonwealth LNG still have work to do to receive the crucial non-FTA permit and achieve FID. Historically, when a project signs at least 80% of its capacity to binding Sale and Purchase Agreements (SPAs), it can be expected to reach FID. CP2 still needs 0.9 Bcf/d in SPAs, and Commonwealth needs nearly 0.6 Bcf/d of new commitments to reach that 80% threshold.
In the January ‘25 Macro report, EDA has adjusted our base case assumptions to include CP2 and Commonwealth into the ‘Expected Full FID’ case due to the more favorable outlook. We forecast total demand for LNG exports to reach 29.2 Bcf/d by late 2030 (purple line in the graph). The Conservative Case in dark blue replaces our base case assumptions from last month and has LNG feedgas reaching 25.7 Bcf/d in late 2030 (dark blue line).
Looking beyond 2030, we expect several other facilities to gain commercial momentum. In December, Energy Transfer (ET) signed a 20-year SPA with Chevron for 2.0 Mtpa at the Lake Charles LNG facility, the first new contract in over two years. Lake Charles LNG needs another 3.5 Mtpa or 0.46 Bcf/d of commitments to reach the 80% threshold.
Woodside’s Louisiana LNG (formerly Tellurian Driftwood) said that it expects to make FID in early 2025. The facility signed an EPC contract with Bechtel in December but still lacks the offtake agreements to realistically make FID. Cheniere’s Sabine Pass Expansion (~2.7 Bcf/d export capacity) has potentially 40% of its offtake volumes already contracted via Cheniere’s Marketing arm, although the facility still needs its DOE non-FTA permit.
Projects still under DOE review include Commonwealth, CP2, NFE Louisiana FLNG, Port Arthur Phase 2 (1.91 Bcf/d), Gulf Stream LNG, the Corpus Christi Midscale Expansion, Lake Charles LNG, Magnolia LNG, and the Sabine Pass Expansion.
Flows – Freezing weather and snowstorms across the US are curtailing production in several basins. US pipelines samples for Monday and Tuesday (January 6-7) were ~2.8 Bcf/d lower than the December monthly average. The Northeast (-1.5 Bcf/d), Anadarko (-0.6 Bcf/d) and Permian (-0.3 Bcf/d) samples show signs of freeze-offs from frigid temperatures this week. The impairments will be reflected in the next weekly averages for Jan 6 - 12.
Pipeline samples from Dec 29 - Jan 5 were relatively flat, increasing by 160 MMcf/d to average 69.9 Bcf/d. The Midland sample is up W-o-W by 4% while the Delaware sample declined 2%. Flows in the Permian have been impacted recently by El Paso Pipeline maintenance, and curtailments could extend through mid-January if a winter storm later this week causes disruptions.
Bakken flow samples increased 1.4% for the Jan 5 week, starting January at 2.4 Bcf/d. ArkLaTex sample increase, continue to increase gradually setting at 10.3 Bcf/d.
Three major winter storms have significantly impacted production in recent winters. Winter Storm Uri disrupted operations for ~7–11 days from February 10–20, 2021. Winter Storm Elliott caused a 6-day interruption from December 21–26, 2022. Most recently, Winter Storm Heather affected production for about 10 days from January 13–23, 2024. We could expect to see a similar trend this winter.
Storage – The Energy Information Administration (EIA) reported a 40 Bcf withdrawal from storage for the week ending January 3, largely in line with analyst expectations. What is less certain is the combined withdrawal for the next two weeks ending January 10 and January 17. Colder weather has moved across much of the Lower 48, and temperatures are expected to remain cold through the 6- to 10-day forecast. Estimates for the week ending January 10 call for a withdrawal above 250 Bcf, and 260+ Bcf for the week ending January 17.
The 40 Bcf withdrawal EIA reported for last week increased the surplus to 207 Bcf vs the 5-year average and sank the delta to last year to a 3 Bcf deficit. A 250 Bcf withdrawal for the January 10 week would reduce the surplus to the 5-year average to just 88 Bcf. Should the following week ending January 17 show a 260 Bcf withdrawal, the surplus to the 5-year average would erode to just 4 Bcf.
Weather for the balance of January is trending colder than the 10-year normal, and the withdrawal for the week ending January 24 could push the 5-year average surplus into deficit territory for the first time since the week ending January 6, 2023. In the latest Macro Supply & Demand Report, East Daley calls for the Lower 48 to exit March at 1,924 Bcf (March 31) with normalized weather.
Rigs – The US rig count fell by 7 for the December 28 week, leaving the rig count at 530. The Permian (-7) and Eagle Ford (-1) lost rigs while the ArkLaTex (+1) and Powder River (+1) basins added rigs on the week. The large reduction in the Permian Basin is likely due to rig moves and should recover next week.
On the midstream side, Energy Transfer (ET) is down 3 rigs net with losses on its Permian and Eagle Ford systems. ONEOK (OKE) gained 3 rigs total on its Bakken and Anadarko systems.
East Daley’s weekly Midstream Activity Tracker monitors rig activity by basin and by gathering and processing (G&P) system to better understand midstream impacts. We allocate rigs and monitor flows through 150+ public and privately owned G&P systems in every North American basin. Reach out for more information on the Midstream Activity Tracker.
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