LNG Exports May Have Unexpected Impacts on US Gas Grid

With US LNG exports set to start as early as the end of this year, the US natural gas pipeline system and markets will face significant changes. Unlike most LNG liquefaction projects, the US exporters will draw feedgas from the US natural gas pipeline grid, a system that currently supplies about 73 Bcf/d (746 Bcm/y) to US consumers. The pipeline system is generally viewed as highly reliable, with major outages very rare, in part because the system taps multiple supply basins and the many different pipelines are interconnected, providing significant redundancy. Significant storage capacity, both in production areas and areas of demand, contribute to the overall robustness of the system. In the past, when hurricanes damaged production facilities in the US Gulf of Mexico, or just forced producers to shut in wells, supply to the market was largely unaffected as gas from other regions, combined with stored supplies, made up the difference. That said, price volatility has accompanied Gulf Coast disruptions as the market has rationed supply by price. But the pipeline system is facing what may be its greatest challenge as US LNG exports start to ramp up. LNG export projects that are under construction or planned could require more than 11 Bcf/d of feedgas, an increase of 15% of total system throughput. Moreover, this demand will require large quantities of gas to move against the traditional direction of pipeline flows. Much of the pipeline grid was built to move natural gas from supply basins in the Southwest and Gulf Coast into the Northeast. But the new LNG projects will require gas to be moved from the Northeast Marcellus and Utica Basins as well as the Southwest to the Gulf Coast. [pardot-form width=”750″ height=”1000″ id=”3958″ title=”Article Request Form- LNG Exports Impact US Gas Grid”]