Natural Gas Imports and Exports Role on the US Economy

Natural gas imports and exports have always played a large role in the US economy.  For decades, natural gas has cost the United States billions in USD.  Recently, the United States has switched from being a net importer of natural gas to being a net exporter. Being a net exporter means more natural gas is exported than is imported. The natural gas import/export pendulum has swung from being a $30 billion drain on our economy in 2005 to being a $3 billion boost in 2017.

The Turning Point for Natural Gas

Natural gas net imports rose steadily from 1986 to 2007, according to the US Energy Information Administration (EIA).  Ramping up from 689 Bcf (billion cubic feet) in 1986, net imports reached the highest volume of 3,785 Bcf in 2007. During the late 80’s and 90’s, the import price stayed fairly stable, averaging $1.92 USD per Mcf (thousand cubic feet). However, this began to change from 2000 to 2008. Import prices rose all the way to $8.70 before it was chopped in half during 2009.  The combination of growing net import volume and skyrocketing price of natural gas caused the net cost of imports to rise dramatically. In 1999, the net cost for natural gas imports was $7.6 Billion. By 2000, it nearly doubled to $13.9 Billion. By 2005, it was all the way up to $29.7 Billion.  For the years 2005 – 2008, net import costs summed $106 Billion.

While the deregulation of the financial industry was the primary cause of the 2007/2008 financial crash, there were other factors that contributed to the crash and the following recession.  The huge accumulated price of natural gas imports, along with crude oil, contributed its share of strain on our economy. With an unsustainable import cost of natural gas and the financial crash combined, 2007 marked a turning point for natural gas imports.

Where Natural Gas is Today

With the market crash in full effect and everyone tightening the belt financially, natural gas imports started dropping while exports were on the rise.  Import volume was at a record high of 4608 Bcf in 2007.  This decreased until the years 2014 and 2015, where imports were around 2700 Bcf annually.  Although they have increased slightly to just over 3000 Bcf, this has been more than offset by increasing export volume.

blankIn 2007, natural gas export volume was at a meager 822 Bcf, only 18% of the import volume. Exports have continued to rise, especially in the last 3 years.  Natural gas exports in 2017 nearly quadrupled that of 2007.  This diminishing import volume and increasing export volume have finally summed to a net export as of 2017, for the first time in history.

Where Natural Gas is Going

The forecasts for natural gas exports remain very strong. On Feb 26, 2018, total natural gas exports hit an all-time high of more than 8 Bcf per day.  According to the EIA, The 2018 projection for liquid natural gas (LNG) exports is 58% higher than in 2017. This trend will continue, reaching 4.8 Bcf per day by 2019. This is 60% greater than the average for 2017.

While the majority of the forecasted export growth will be from LNG, the forecast for pipeline natural gas exports is also strong. While 2017 realized a daily average of 6.7 Bcf, this year (2018) is projected to average 7.2 Bcf per day.  2019 is forecasted to average 8.0 Bcf per day, an increase of 19% over 2017. Total exports (LNG and pipeline combined) are forecast to average nearly 13 Bcf for 2019.

Net Economic Value of Natural Gas Exports and Imports for 2018 and 2019

What does this mean as far as the net economic value of natural gas exports and imports during the near future?  Last year, the net positive revenue of natural gas exports was $2.95 Billion.  This year the forecast is for net positive revenue of $5.1 Billion. Next year the projection is for net positive revenue of $8.2 Billion.

blankThis is not the end of the story for natural gas.  While renewable energy sources are ramping up, they cannot sufficiently provide for the world’s energy needs in the upcoming decades. Natural gas is able to bridge that gap at an economically viable price.  Over the next few decades, this valuable homeland resource will continue to boost our economy.

As a natural gas pipeline contractor, Hanging H Companies has been contributing to building the pipeline infrastructure that enables this net export of natural gas and our economic growth. We are proud to play our part in bringing a cleaner alternative than coal to the North American population.  As greener cleaner technologies emerge, such as renewable natural gas (link to article), CCU, and CCS (carbon capture and storage) (link to article), Hanging H will be right there, continuing to support the pipeline infrastructure that makes it all possible.

April 15, 2018

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