EIA: U.S. LNG exports to drop by six per cent following Freeport outage

Outlook & Strategy

July 13, 2022, by Sanja Pekic

The U.S. Energy Information Administration (EIA) forecasts U.S. LNG exports to fall six per cent from the first half to the second half of 2022 due to the Freeport outage.

EIA expects U.S. LNG exports to average 10.5 billion cubic feet per day during the second half of 2022. This is six per cent decrease from the first half of the year. The data comes from the agency’s July 2022 Short-Term Energy Outlook.

Moreover, that amount is a 14 per cent decrease in U.S. LNG exports from EIA’s June forecast.

EIA revised its estimates based on an outage at the Freeport LNG facility in Texas, which is expected to last until late 2022. To remind, Freeport accounts for 17 per cent of U.S. LNG export capacity. EIA assumes the facility will return to near full operations in January 2023.

“With less LNG being exported in the second half of the year, more natural gas is likely to stay in the domestic market,” said EIA administrator Joe DeCarolis. “We expect lower U.S. natural gas prices for the rest of 2022 than we had previously forecast, but lower prices in 2022 led us to reduce our expectations for natural gas production.”

According to the estimations, the LNG exports averaged 11.2 billion cubic feet per day (Bcf/d) in the first half of 2022, compared with 9.5 Bcf/d in the same period in 2021. EIA expects LNG exports to average 10.9 Bcf/d in 2022 and 12.7 Bcf/d in 2023.

The agency forecasts the U.S. Henry Hub spot price will average $5.97 per million British thermal units (MMBtu) during the second half of 2022. This means it is down by 44 per cent from the June forecast.

For the last three quarters of 2023, EIA expects natural gas prices will average $4.36/MMBtu, up 14 per cent from the June forecast. The agency also expects that more natural gas will be in storage heading into this winter than it had forecasted in June.

In addition, EIA expects energy-related CO2 emissions in the U.S. to increase by 1.5 per cent in 2022 and remain generally unchanged in 2023.