The US is a natural gas superpower

Charts of the week

This chart on US liquified natural gas exports comes from S&P Global, by way of the New York Times, back in February of this year:

Source: New York Times, “How the US became the world’s biggest gas supplier”, Feb 2024.

This forward-looking view of LNG export capacity comes from the EIA, in September.

And this chart on announced US natural gas power additions comes from research by my colleague Johnny Daugherty at EIP.

Notes:

• “Fracking” is still (so far) the most impactful advancement in energy technology in the 21st century. Solar photovoltaics and lithium-ion batteries have also made an enormous splash, of course; and I’m convinced they are on track to become the biggest movers & shakers over the course of this century. But, for now, North American natural gas remains the biggest energy story of our time.

• For context: Last year (2023) US exports of LNG contained about five times as much energy as all of the solar power generated in the country!¹ And we’re on track to double LNG export capacity from North America by 2030.

• It’s now undeniable that the US is a global natural gas superpower, capable of wielding LNG as an instrument of geopolitical influence. Just look at how quickly the US was able to redirect LNG from Asia to Europe, in order to support the continent following Russia’s invasion of Ukraine.

Source: New York Times, “How the US became the world’s biggest gas supplier”, Feb 2024.

• Just a few years ago, many net-zero scenarios were assuming that investments in new natural gas power generation assets were on the wane. Yet the North American electricity sector is facing a surge in demand the likes of which it hasn’t experienced in decades; and utilities are having a very difficult time mobilizing new capacity quickly enough to keep up.²  (Around EIP, we’ve been referring to this state of affairs as “The Electricity Gauntlet”.) The fact is: it’s practically impossible to imagine serving tens of gigawatts of new demand in the next 3-5 years without adding new gas-fired power generation in addition to renewables, battery storage, and other resources.

• The question is now: How can we future-proof all of this new natural gas generation for much more carbon-constrained future scenarios?

• One of my favorite answers to this question is to build distributed gas generation, such as the natural gas microgrids pioneered by Energy Impact Partners portfolio company Enchanted Rock. Because E-Rock builds gas gensets that are much more efficient, cleaner, and quieter than typical backup diesel generators, they’re approved to run for many more hours outside of emergency conditions — which enables them to simultaneously serve as peaking capacity resources for grid operators as well as backup power resources for individual facilities.

• Hence, even if increasingly tight carbon emissions constraints force these units to run during vanishingly few hours per year, they can still provide capacity during those rare periods in which the grid is especially short, and retain the resilience value which they provide during grid outages. That’s about as future-proofed as it gets for new natural gas generation, today.

   

1. ~12 bcf/day of LNG = 1,270 TWh of embodied energy per year. US solar power generation totaled 238 TWh in 2023.

2. I’m referring to “capacity” at every level of the power grid, spanning Generation, Transmission, and Distribution.