US LNG Investment Decisions Much Tougher
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Remember when US liquified natural gas (LNG) exports were going to save global energy markets and become an infinite money glitch for American exporters? Pepperidge Farms ENERGYminute remembers.
Background: In early 2022, the global economy was red hot. Europeans were scrambling for natural gas, interest rates were low, and it looked like the beginning of a truly epic American LNG boom.
(Narrator’s voice: It wasn’t.)
What happened: Several headwinds showed up: interest rates rose dramatically over the past year, both the economy and banking system turned out to be on shaky ground, and natural gas prices fell. As a result, LNG infrastructure investment decisions are in much murkier territory in early 2023.Two projects – NextDecade’s Rio Grande and Energy Transfer’s Lake Charles – have faced repeated investment delays. Higher construction costs and interest rates are expected to result in higher tolls for customers, reducing project appeal.
But it’s not all bad: The $7.8 billion Plaquemines Phase 2 and the $13 billion Port Arthur Phase 1 projects both won approval.
Zoom out: The US LNG boom is probably not over, but it may finally be succumbing to the thunderous noise of economic doom and gloom. We’ll see if it’s a temporary pause, or a fundamental change.