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A service for energy industry professionals · Tuesday, October 23, 2018 · 465,945,191 Articles · 3+ Million Readers

U.S. Becomes World’s Largest Crude Oil Producer and Department of Energy Authorizes Short Term Natural Gas Exports

WASHINGTON, D.C. –The Energy Information Administration (EIA) estimated in their latest Short-Term Energy Outlook that the United States is now the largest global crude oil producer, likely surpassing Russia and Saudi Arabia. In February, U.S. crude oil production exceeded that of Saudi Arabia for the first time in more than two decades. In June and August, the United States surpassed Russia in crude oil production for the first time since February 1999.

The U.S. Department of Energy (DOE) also announced that on September 6, 2018, a short-term order was issued to the Freeport LNG project to export up to 2.14 billion cubic feet per day (Bcf/d) of natural gas as liquefied natural gas (LNG) over a two-year period to both free-trade and non-free trade agreement countries.  This order authorizes Freeport’s initial commissioning volumes and other exports pursuant to short-term contracts.  Freeport LNG will be exporting the LNG from the Freeport LNG Liquefaction Project, which is currently under construction on Quintana Island, Texas. 

During this two year authorization period, Freeport LNG will be authorized to export LNG to any country not prohibited by U.S. law or policy.  The two year export term will become effective on the date of the commencement of the facility’s first export of LNG, currently projected to be in the third quarter of 2019. 

The recent short-term authorization issued to Freeport LNG is not additive to any of the prior long-term export authorizations DOE has issued to the Freeport LNG Project.  Rather, the recent short-term order issued to Freeport LNG allows for additional flexibilities to export LNG pursuant to short-term contracts and for the initial commissioning volumes from the project.  Freeport will also still be able to export LNG pursuant to its long-term authorizations from DOE.

Since exports of U.S. LNG began in 2016, over 1.3 trillion cubic feet of U.S. natural gas has been exported.  U.S. LNG has now landed in 30 different destinations in Europe, Asia, Africa, the Middle East, South America, North America, and the Caribbean. EIA expects natural gas exports to average 9.9 Bcf/d in 2018, up 15% from 2017 levels. EIA also expects natural gas exports to rise by an additional 38% in 2019 to 13.7 Bcf/d.

To date, the Department of Energy has approved 21.35 Bcf/d of long-term exports of natural gas to any country in the world not prohibited by U.S. law or policy.  There are currently two large-scale LNG export projects in operation, Sabine Pass and Dominion Cove Point, which have a combined export capacity of approximately 3.5 Bcf/d.  Freeport is one of four additional large-scale LNG export projects expected to be completed over the next two years.  Once these four projects are completed, the United States’ LNG export capacity is expected to reach approximately 11 Bcf/d.  There are over a dozen large-scale export projects under review that would provide over 20 billion cubic feet per day of additional export capacity if approved. 

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