Natural gas price increases driven by the exporting of U.S. natural gas could come sooner than expected, according to a recent article on SeekingAlpha.com.
The article suggests that natural gas markets are reaching a turning point due to the growth in demand from multiple sources, particularly power plants, exports via pipeline, and exports of liquefied natural gas (LNG) by tanker. “Investors believe that the start of exports through LNG terminals will soak up the excess supply of gas, and thus raise prices,” the article states. “What many investors do not realize is that natural gas exports are already ramping up, as natural gas flows through pipelines into Canada and Mexico.”
Canada now imports more U.S. natural gas than it exports to the U.S., and the U.S. could greatly increase exports to Canada via the new NEXUS and Atlantic Bridge pipelines, which are scheduled to come online in 2017.
Meanwhile, Mexico has seen its natural gas production declining for years, and the country is now increasing its imports via pipelines from Texas. “That has caused Mexican imports of U.S. natural gas to increase drastically in the last few years, to 2.5 billion cubic feet a day (Bcf/d) in March 2015,” according to SeekingAlpha. “Part of this increase is driven by new pipelines that were put into service late in 2014, which increased total export capacity into Mexico to about 7 Bcf/d,” the article states. “There is also a build out of natural gas power plants underway in Mexico, and continued infrastructure expansion there that allows the imported gas to travel further into the country.”
When U.S. natural gas export terminals begin coming on line later this year, the combination of growing pipeline exports and new LNG exports could drive up prices and put an end to the low natural gas prices that have made the fuel attractive to consumers.
To read the SeekingAlpha.com article, click here.