The Sierra Club’s LNG Bravo Sierra – Watts Up With That?

Guest “Bravo Sierra!” by David Middleton

During President Trump’s inauguration speech, he promised to unlock the “liquid gold” beneath Americans’ feet and ramp up fossil fuel production. Doing so, he suggested, would lower gas prices and lead to cascading American wealth. In his executive order declaring a “national energy emergency,” he directed the Department of Energy to resume processing LNG export authorizations and prioritizing the development of LNG in Alaska.

There is no actual “energy emergency”—at least not in the sense Trump means. Under former president Joe Biden, the United States was already pumping out record amounts of oil and gas. And growing evidence suggests that Trump’s plan to maximize LNG exports will actually achieve the opposite of his stated goal: Two January reports show that increased US LNG exports will drive up domestic gas prices, with most of those LNG profits winding up overseas in the coffers of foreign investment firms, with particular advantages for China.

Money from LNG goes to foreign investors

The first report, from the Private Equity Stakeholder Project, found that a startling proportion of US LNG profits go to foreign investment firms. Researchers found that 14 investment firms, from eight foreign countries, have financed 11.5 billion cubic feet per day in US LNG export capacity—about 78 percent of peak US LNG export capacity in 2023.

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Bravo Sierra Club

Note to Ms. Nolan: That’s how private equity works. I don’t have the time or inclination to verify exactly who financed the construction of the seven currently operational LNG export facilities or the five that are currently under construction. However, whoever financed the construction usually reaps much of the profits until the financing note is paid off. Irrespective of the Bravo Sierra Club’s misinformed opinions, North American LNG export capacity will more than double during President Trump’s second term in office.

The vast majority of this export capacity will be along the US Gulf Coast and will be exporting natural gas produced from oil & gas fields located in the United States and Gulf of America. If LNG exports drove up prices, it would have already done so.

From 1997-2012, the US consumed more natural gas than we produced and the average price was $4.76 per thousand cubic feet (mcf). Since 2013, we’ve produced more natural gas than we consumed and the priced $3.35/mcf. If we take out the anomalously high prices in 2022, it would have averaged about $3.00/mcf.

The US can afford to be a net exporter of natural gas because we produce more than we consume. This works to keep prices lower. If LNG exports were restricted or prohibited, it would temporarily crash natural gas prices. Drilling would be curtailed, production would decline and prices would rise again.

What makes natural gas prices go up? It’s not increased production or consumption.

Imported natural gas drives up prices – Because we are a net importer when we produce less than we consume.

But we’ll use up all our reserves!

U.S. Crude Oil and Natural Gas Proved Reserves, Year-end 2022

With Data for 2022   |  Release Date:  April 29, 2024   |   Next Release Date: April 2025

Oil highlights

• U.S. crude oil and lease condensate proved reserves increased 9% from 44.4 billion barrels to 48.3 billion barrels at year-end 2022 (Table 1).
• U.S. crude oil and lease condensate production increased 6% in 2022.
• In Texas, which has more proved reserves of crude oil and lease condensate than any other state, proved reserves increased 9% in 2022 (1.7 billion barrels), the largest net increase in any state (Table 6).
• In New Mexico, crude oil and lease condensate proved reserves increased 26%, the second-largest net increase (1.3 billion barrels). In North Dakota proved reserves increased 14%, the third-largest increase (0.6 billion barrels).
• The largest net decrease, 13%, in proved reserves of crude oil and lease condensate in 2022 was in California (225 million barrels) (Table 6).
• The 12-month, first-day-of-the-month average spot price for West Texas Intermediate (WTI) crude oil at Cushing, Oklahoma, increased by 43%, from $66.26 per barrel in 2021 to $94.54 per barrel in 2022.

Natural gas highlights

• Proved reserves of U.S. natural gas increased 10%, from 625.4 Tcf at year-end 2021 to 691.0 Tcf at year-end 2022, establishing a new record for natural gas proved reserves in the United States for a second consecutive year (Table 8).
• Natural gas proved reserves in Alaska increased 25% in 2022, raising that state’s total from 99.8 Tcf to 125.2 Tcf—the largest increase of all states in 2022.
• Texas had the second-largest increase in proved reserves of natural gas in 2022 (21.2 Tcf, or 14%), and New Mexico had the third-largest increase (9.9 Tcf, or 27%).
• The 12-month, first day-of-the-month average spot price for natural gas at the Louisiana Henry Hub increased by 71% in 2022, from $3.67 per million British thermal units (MMBtu) in 2021 to $6.29/MMBtu in 2022, which was the highest annual average price since 2008.
• Operators in Pennsylvania reported the largest net decrease in proved reserves of natural gas in 2022 (652 billion cubic feet, or 0.6%).
• In 2022, U.S. natural gas exports were 6.9 Tcf, the highest volume on record.

Proved reserves are estimated volumes of hydrocarbon resources that analysis of geologic and engineering data demonstrates with reasonable certainty are recoverable under existing economic and operating conditions. Reserves estimates change from year to year because of:

• Price and cost changes
• New discoveries
• Thorough appraisals of existing fields
• Existing reserves production
• New and improved techniques and technologies

To prepare this report, we collect independently developed estimates of proved reserves with Form EIA-23L from a sample of U.S. operators of oil and natural gas fields. We use this sample to further estimate the portion of proved reserves from operators who do not report. This year, we received responses from 397 of 404 sampled operators, which provided coverage of about 90% of proved reserves of oil and 93% of proved reserves of natural gas at the national level. We develop estimates for reserves located in the United States, each state individually, and some state subdivisions. States and regions with subdivisions are:

• California
• Louisiana
• New Mexico
• Texas
• Federal Offshore Gulf of Mexico

US EIA