Demand for natural gas for liquefaction and LNG exports is on par with last year’s levels. The increase in liquefaction capacity in the first half of 2022 was offset by the shutdown of liquefaction operations at the Freeport, Texas facility since June. Although Freeport liquefaction activities are being resumed, the natural gas demand for these facilities will not return to full liquefaction potential of about 2 Bcf/d until the end of March 2023. In this case, total demand for liquefaction and LNG exports is expected to be near 14 Bcf/d, the maximum level until new facilities are operational in late 2024 or early 2025. However, this return is fully anticipated by futures markets.
In response to this decline in demand, production was up 5.0 Bcf/d from its average level in January and February 2022. Throughout 2022, production grew at a much slower pace than in recent years. While oil and gas producers continue to focus on improving their balance sheets, they are also facing significant increases in production costs and labour shortages. A slowdown in production growth can also be attributed to some transportation gaps from major production basins to consumption sites, particularly in the north between the Appalachian region and New England and in the South-Eastern United States. However, in the face of resilient continental consumption, U.S. natural gas production will remain at 101 Bcf/d, a level the U.S. Energy Information Administration (EIA) expects to reach by the end of 2023.