The U.S., the world’s leading exporter of liquefied natural gas (LNG), is experiencing a unique shift in its energy landscape. For the first time since LNG exports began from the lower 48 states in 2016, demand for natural gas used in LNG production (feedgas) is projected to decline in 2024. This shift comes despite the U.S.’s crucial role in supplying gas to Europe, particularly following Russia’s invasion of Ukraine.
Historically, feedgas demand has steadily increased year over year, driven by rising global LNG demand and the expansion of U.S. export capacity. However, 2024 presents a different picture. Data from LSEG reveals that with only a few days remaining in the year, average daily feedgas flows to the eight major U.S. LNG export plants have dipped to 13.0 billion cubic feet per day (bcfd), slightly below the 2023 average of 13.1 bcfd. This equates to a reduction in the energy needed to supply roughly 5 million U.S. homes daily.
Several key factors contribute to this unexpected downturn. Plant outages, particularly at Freeport LNG’s Texas facility, have significantly impacted feedgas demand. This plant, the second largest in the U.S., experienced disruptions in at least one of its three liquefaction trains almost every month in 2024. Additionally, delays in the construction of new LNG export facilities have further constrained demand growth. Rising costs and supply chain challenges have hampered projects like Venture Global LNG’s Plaquemines plant in Louisiana and the Golden Pass plant in Texas, a joint venture between Exxon Mobil and QatarEnergy.
Despite this temporary setback, industry experts anticipate a robust rebound in the coming years. The U.S. is projected to more than double its LNG export capacity over the next four years, with new plants coming online and existing facilities ramping up production. This expansion should boost capacity from the current 13.8 bcfd to 24.2 bcfd by 2028. Experts at Rapidan Energy Group and Columbia University’s Center on Global Energy Policy forecast significant feedgas demand growth in 2025, driven by the tight global gas market and the commissioning of new export projects.
Although feedgas demand is down, overall U.S. LNG exports are expected to slightly increase in 2024 due to improved operational efficiencies. The U.S. Energy Information Administration (EIA) projects a 1% rise in LNG exports this year, following a 12% jump in 2023. However, with new projects slated to begin operations, a more substantial growth of around 14% to an estimated 13.7 bcfd is anticipated for 2025. This signifies a return to the rapid expansion that characterized the U.S. LNG sector in recent years. The current decline in feedgas demand appears to be a temporary pause in a larger trend of growth, with the long-term outlook for U.S. LNG remaining positive.
