Summary
Preliminary data show a 6% increase for domestic dry natural gas production in 2014 to 25,718 billion cubic feet (Bcf), a record level for the United States. This higher level of natural gas production had the effect of displacing gross natural gas imports, which decreased by 7% in 2014 to 2,695 Bcf. As a result, net imports of natural gas (imports minus exports) in the United States fell 9% in 2014, continuing a decline that began in 2007. As has been the trend in recent years, higher domestic production of natural gas reduced U.S. reliance on foreign natural gas and kept U.S. natural gas prices lower than natural gas prices in Europe and Asia.
| five-year average |
2013 | 2014 | 2014 vs. five-year average |
2014 vs. 2013 | |
|---|---|---|---|---|---|
| Imports (Bcf) | |||||
| Pipeline | 3,095.7 | 2,786.5 | 2,635.9 | -15% | -5% |
| LNG | 300.7 | 96.9 | 59.2 | -80% | -39% |
| CNG | 0.3 | na | |||
| Total | 3,396.4 | 2,883.4 | 2,695.4 | -21% | -7% |
| Exports | |||||
| Pipleline | 1,341.3 | 1,569.4 | 1,492.4 | 11% | -5% |
| LNG | 17.5 | 0.2 | 13.6 | -22% | 6739% |
| LNG re-exports | 22.4 | 2.7 | 2.7 | -88% | -2% |
| CNG | 0.1 | 0.2 | 89% | ||
| Total | 1,381.2 | 1,572.4 | 1,508.9 | 9% | -4% |
| Net | 2,015.2 | 1,310.9 | 1,186.5 | -41% | -9% |
The natural gas imports/exports market continues to undergo changes:
- Lower natural gas imports from Canada resulted in the decline of net imports in 2014, which were 41% below the five-year average.
- Natural gas imports to the United States, 98% of which arrive via pipeline from Canada, have decreased almost every year since 2007, and in 2014 reached the lowest level (2,636 Bcf) since January 1995.
- Natural gas exports from the United States decreased 4% in 2014 to 1,509 Bcf, but they remained 9% above the five-year average. Natural gas exports to Mexico increased 10% in 2014, setting a record, but exports to Mexico did not offset the 16% decline of natural gas exports to Canada.
- The United States also traded liquefied natural gas (LNG) and compressed natural gas (CNG) with its partners, but these volumes were minimal in 2014.
| five-year
average |
2013 | 2014 | 2014 vs. five-year
average |
2014 vs. 2013 | |
|---|---|---|---|---|---|
| Pipeline | $0.18 | $0.33 | $0.18 | 3% | -45% |
| LNG | $5.18 | $6.56 | $6.81 | 32% | 4% |
| CNG | na | na | $0.03 | na | |
| Total | $0.25 | $0.25 | $0.21 | -15% | -13% |
The average price difference between natural gas exports and imports (price differential) was 15% lower than the five-year average at $0.21 per thousand cubic feet (Mcf) in 2014. The pipeline import prices were 7% greater than the pipeline export prices in 2014 compared with 2013 prices, resulting in a net decrease of the price differential in 2014.
After 2008, the price of natural gas traded at Henry Hub in Louisiana, the national benchmark for U.S. natural gas, dropped by nearly half, to an average of $3.94/Mcf in 2009. Because most U.S. LNG import prices are linked to Henry Hub prices, LNG import prices fell by 60% to $4.59/Mcf in 2009 and have remained between $4.59/Mcf and $8.80/Mcf. Additionally, higher LNG demand from abroad, especially from Japan after the Fukushima nuclear crisis in 2011, contributed to the increase of the LNG price differential to $8.56/Mcf in 2012 and to $6.81/Mcf in 2014. However, the United States imported significantly less LNG in 2014 than in previous years, which lessened the effects of the high LNG price differential on the total average price differential.
Overview of U.S. natural gas net imports by region
Net imports of natural gas by region have varied significantly in the United States. Since 2007, net natural gas imports in the Northeast, North Central, and South have dropped considerably because of natural gas production growth in new areas in the United States.
Before 2009, most net imports in the Northeast occurred along the New York/Canadian border, representing 50% to 80% of New York’s total natural gas consumption. Since 2009, increased natural gas production in Pennsylvania from the Marcellus Shale has resulted in lower net imports to New York, and in 2014 New York became a net exporter of natural gas to Canada.
The North Central region became a net exporter of natural gas in 2007 because of significant growth in exports to Canada at St. Clair, Michigan. This change was likely because of additional natural gas supplies from the Gulf Coast and the Rockies that displaced natural gas imports from to Minnesota. In 2014 natural gas net exports in the North Central region decreased by 53% to 210 Bcf from 2013's level. This declined is likely resulted from decreasing natural gas flows to the Northeast region from Ontario, Canada.
Before 2009, net imports in the South were minimal compared with other regions in the United States. However, starting in 2009 the United States began exporting a larger amount of natural gas to Mexico to meet an increasing demand from new natural gas power plants in northern Mexico. This increased demand for imports has made Mexico the largest net importer of U.S. natural gas, particularly from Texas.
New England relies on the Algonquin Gas Transmission and the Tennessee Gas Pipeline to deliver natural gas from the Marcellus and the Gulf Coast for most of its consumption needs. These pipelines adequately serve New England’s demand during most of the year. However, during peak demand days, New England relies on imports from Eastern Canada and LNG imports at the Everett LNG terminal in Massachusetts for additional supplies. Even though New England has small-scale LNG above-ground storage facilities, these facilities do not hold sufficient supplies for peak demand periods. Over the past few years, the import markets in New England have changed, reflecting the increased production in the United States and the increased demand for LNG abroad. As a result, pipeline and LNG imports dropped by 46% from 2011 to 2014, a decrease of 144 Bcf.
All LNG imports in Massachusetts originate from Trinidad and Tobago or Yemen. These imports made up about 50% of total imports in New England over the past decade, but they fell to 17% of total imports in 2014. Natural gas imports in Maine are usually natural gas produced in Nova Scotia and LNG imports at Canaport in St. John, New Brunswick. These imports decreased by 24% from the previous five-year average to 80 Bcf in 2014.
In 2013, imports from Eastern Canada decreased to 55 Bcf, the lowest level on record, because of lower natural gas production from Sable Island in Nova Scotia and lower LNG imports at Canaport. New production, however, from Deep Panuke in Nova Scotia has contributed to the increase of natural gas imports in Maine, which were up 45% from the 2013 level in 2014. Additionally, natural gas imports in New Hampshire and Vermont have increased over the last two years to 63 Bcf in 2014, which partially offset the decline of imports from Eastern Canada and LNG imports at the Everett terminal.
Because of increased natural gas production in the Marcellus, imports of natural gas in the Northeast have declined since 2007 to 10 Bcf in 2014. Previously, almost all of natural gas imports in the Northeast came from Canada delivered across the New York/Canadian border. These imported volumes were equivalent to 50% to 80% of total New York natural gas consumption prior to 2010, but this level dropped to 4% in 2013. Although additional supplies from the Cove Point terminal in Maryland, which began operation in 2003, alleviate demand for imports from Canada in this state, imports from Canada in the Northeast continued to rise until 2007, when the United States began producing more shale gas. With increasing production in the Northeast, the United States began exporting natural gas from the Marcellus Shale to Canada in 2011, and natural gas imports fell to new lows. A major development in the Northeast was the completion of the Northern Access Expansion Project in late 2012, which increased delivery capacity to Canada by 320 MMcf/d, crossing the Niagara Falls exit point in western New York. In 2014, New York became a net exporter of natural gas to Canada.
Over the past few years, high transportation costs on the TransCanada pipeline and increased natural gas production in the Northeast likely contributed to the decrease of natural gas imports from Canada to Minnesota. Extreme cold temperatures during the winter of 2014 increased demand for natural gas in eastern Canada and the Northeast part of the United States. The increased demand is likely the reason for the 39% increase of natural gas imports to 350 Bcf in 2014 from the previous year. However, imports in the North Central region remained 20% below the previous five-year average in 2014.
Natural gas exports in the North Central region decreased by 37% from 2011's level to 560 Bcf in 2014, which is similar to the decrease in imports in this region. Almost all natural gas exports in the North Central region occur at St.Clair, Michigan, some of which might eventually be imported in the Northeast. The Northeast has been importing less natural gas from Canada, which resulted in a decrease of natural gas exports to Canada at St.Clair between 2011 and 2013.
From 2011 to 2013 natural gas imports in Minnesota and natural gas exports in Michigan decreased by a similar rate that might reflect the challenge of categorizing intransit volumes accurately in the North Central region. Import and export volumes should exclude intransit deliveries and receipts. However, the complexity of tracking the original sources of traded natural gas in the North Central region might make it complicated for companies to accurately report the import and export volumes to the U.S. Department of Energy’s Office of Fossil Energy.
Intransit deliveries: Redeliveries to a foreign country of foreign natural gas received for transportation across U.S. territory, and deliveries of U.S. natural gas to a foreign country for transportation across its territory and redelivery to the United States.
Intransit receipts: Receipts of foreign natural gas for transportation across U.S. territory and redelivery to a foreign country, and redeliveries to the United States of U.S. natural gas transported across foreign territory.
In the South region, net exports increased to 706 Bcf in 2014, a record level. The increase was driven by increased gas exports to Mexico and decreased LNG imports. Net LNG imports in the South decreased from a peak level in 2007 to 16 Bcf in 2014, while net exports to Mexico doubled 2010's level to 722 Bcf in 2014.
The United States has been a net exporter of natural gas to Mexico from the South region for many years. Over the past decade, the United States exported 400 Bcf on average annually to Mexico, and imported 20 Bcf. Increased natural gas production from the Gulf Coast, particularly from the Eagle Ford shale play in Texas, led to the increase of natural gas exports to Mexico to 724 Bcf in 2014, while reducing imports to 1 Bcf.
In addition to abundant natural gas production in the Gulf Coast that contributed to low prices at Henry Hub, increased demand for U.S. natural gas from Mexico’s power sector likely resulted in higher natural gas exports to Mexico. Mexico is building additional natural gas power plants in the northern part of the country with the expectation of importing additional natural gas from the United States, mostly from Arizona and Texas.
In November 2014, NET Midstream completed the Net Pipeline project with the capacity to transport 2.3 Bcf/d of natural gas from the United States to Mexico, feeding their mainline system that will transport natural gas further into Mexico. NET Midstream secured a long-term firm natural gas transportation agreement with MexGas Supply Ltd for up to 2.1 Bcf/d. By the end of 2014, Net Pipeline had transported 8 Bcf of natural gas exports from Texas to Mexico. The two pipelines added by Net Pipleine in 2013 increased the capacity to export natural gas to Mexico by 0.6 Bcf/d.
The South imported most LNG from U.S. trading partners at terminals in Texas, Louisiana, and Georgia. Total LNG imports peaked in 2007, when the United States imported 753 Bcf, of which 421 Bcf was imported into the South. Since 2007, LNG imports have decreased to minimal levels except in New England, where Massachusetts remained dependent on LNG imports for peak demand days in winter.
Natural gas imports into the Northwest in 2014 remained relatively unchanged compared with previous years. The Ruby Pipeline, which began operations in 2011, was able to deliver natural gas from the Rockies basin to Oregon and California, but it had little impact on natural gas imports to the Northwest region. Imports from Western Canada decreased by 8% from the previous five-year average to 1,942 Bcf in 2014. Advanced drilling technologies used in United States have also benefited natural gas producers in Canada, contributing to a significant growth of natural gas production in western Canada. As a result, natural gas import prices from western Canada are cheaper than those for natural gas produced in the United States. This economic advantage explains the consistent high levels of imports from Canada into the Northwest region.
LNG exports
The Kenai LNG export terminal in Alaska is the only facility in the United States that exports domestically produced LNG to foreign countries along the Pacific Rim. The Kenai LNG terminal became inactive in November 2012 because of limited natural gas supply for liquefaction from the mature North Cook Inlet gas field, but it resumed operation in early 2014. The Kenai LNG terminal shipped 13 Bcf to Japan in 2014 under a short-term license from the U.S. Department of Energy.
Even though domestically produced LNG exports by vessel have only occurred in Alaska, increased natural gas production in the United States is compelling the LNG industry to build export facilities in the Lower 48 states. Companies began applying to build liquefaction infrastructure to export LNG in 2010, when high oil prices drove up demand for cheaper U.S natural gas. Since July 2014, Brent oil prices, which are partially used to determine LNG prices in international markets, particularly in Asia, have decreased by 60%. This price environment could affect the economics of building new LNG liquefaction facilities in the United States.
As of March 2015, Cameron LNG, Carib Energy, Dominion Cove Point LNG, Freeport LNG, Jordan Cove Energy Project, Lake Charles Exports, LNG Development, and Sabine Pass Liquefaction are the only companies that have received approval from the U.S. Department of Energy to export domestic LNG to both Free Trade Agreement and non-Free Trade Agreement countries. U.S. Department of Energy regulates the imports and exports of the natural gas commodity, for authorization to export domestic LNG to foreign countries. Most of these companies also need approval from the Federal Energy Regulatory Commission (FERC), which regulates the construction of facilities for imports and exports, to build LNG export facilities. Sabine Pass, Cameron LNG, Freeport LNG, Cove Point, and Corpus Christi LNG have received FERC's approval to construct liquefaction facilities in the Lower 48 states.
The first U.S.-based LNG export facility in the Lower 48 states, the Sabine Pass terminal in Louisiana, is expected to begin operations by the end of 2015.
NOTE: Data as of January 2015 from March 2015 Natural Gas Monthly
See also: Natural Gas Imports and Exports - Quarterly Reports (Office of Fossil Energy, U.S. Department of Energy's Natural Gas Regulatory Program)