Expectations are building among U.S. oil and gas executives that the European gas crisis will accelerate the next supercycle of U.S. LNG export projects, supporting their companies' growth ambitions.

LNG companies during the most recent earnings reporting season highlighted a flood of commercial deals for U.S. LNG in recent months as supporting the build-out of new production capacity, especially as demand in Europe surges following Russia's invasion of Ukraine. Natural gas pipeline developers described new infrastructure growth opportunities, while upstream gas producers touted their exposure to the international LNG market.

Meanwhile, some of the giant integrated oil and gas companies showed interest in gaining U.S. LNG supplies.

Participants throughout the supply chain expressed optimism that a shift in sentiment toward the natural gas sector could ease permitting for new projects.

S&P Global Commodity Insights compiled insightful comments by executives on these issues.

LNG developers target final investment decisions

LNG developers such as Cheniere Energy Inc., Sempra and Energy Transfer LP, which benefited from a surge in long-term contracting activity over the past several months, described a strong outlook for their expansion projects.

"The demise of the 20-year contract was greatly exaggerated, and you have seen that in the last few quarters," Anatol Feygin, chief commercial officer and executive vice president at Cheniere, said May 4.

Sempra CEO, President and Chairman Jeffrey Martin agreed. "There's going to be real demand near-term and long-term for more LNG facilities," Martin said. "And that impacts the pricing environment and the opportunity to have longer-tenured contracts."

Concerns over the security of supply in the wake of Russia's invasion prompted an uptick in interest in U.S. LNG among European buyers. But U.S. developers said they were still waiting to see what measures European governments would use to follow up on their goals of boosting their LNG supplies, with an early focus on shoring up import infrastructure.

"We will see more ability to bring more LNG into Europe, but how that is commercially underpinned ... has yet to shake out," Feygin said.

An issue that EU leaders need to address is that project developers typically need long-term commitments tied to their supplies to secure financing. European buyers in recent years have shied away from such commitments, given the uncertainty about the EU's stance on the role of gas after 2030.

"There could end up being some government guarantees for some of the longer-term off-take contracts," Thomas Mason, Energy Transfer president for LNG, said May 4.

Midstream executives see pipeline need

Pipeline giant Kinder Morgan Inc., which transports about half the gas delivered to U.S. LNG export terminals, expected growing demand for new U.S. LNG capacity to drive investment in other midstream expansions, according to Executive Chairman Richard Kinder on an April 20 earnings call. Kinder Morgan owns the Elba Island LNG terminal in Georgia, which is the smallest of the major U.S. export facilities, with a capacity of 2.5 million tonnes per year.

"All of our present LNG export facilities will be running at capacity for the foreseeable future, and the contracts necessary to support the construction of new facilities in the next few years will be more attainable than they've been in the past," Kinder said. "By way of caution, I'm still concerned that our federal government will not properly expedite permitting of these new facilities. But I'm reasonably hopeful that at some point, this administration will recognize the importance of playing its energy card to support its allies and sanction its adversaries."

Williams Cos. Inc. cited the Federal Energy Regulatory Commission's recent decision to suspend an overhaul of its decades-old permitting policy for natural gas projects as a positive signal on the regulatory front, as it pursues an expansion project to service growing LNG export demand on the Gulf Coast.

"We think there's a desire from the administration and certainly from some of the key Senate committees to streamline permitting, but I'm not sure that everybody is moving in lockstep with that amongst the various agencies just yet," Williams President and CEO Alan Armstrong said. "But I'm very hopeful, given the direction [of] FERC, ... that we'll see that with other agencies as well."

TC Energy Corp. executives described "a better balance between energy security and energy transition" bringing forward new growth opportunities.

"I could see a scenario where over the next two or three years, it's another 2 or 3, maybe 4 Bcf/d of capacity to the LNG terminals that we're adding on our systems," said Stanley Chapman, TC Energy president of U.S. and Mexico gas pipelines.

Drillers tout LNG exposure

EQT Corp. could use some of the cash from higher natural gas prices to buy stakes in LNG export terminals to more directly contract with overseas buyers, EQT President and CEO Toby Rice said April 28.

"Unleashing U.S. LNG is going to be the long-term demand signal that this industry needs to see before they think about growth," Rice said. "These would be sustainable growth opportunities for us."

Antero Resources Corp. expected LNG export growth to help support a higher price outlook for U.S. gas, which will mainly be driven by producers' restraint in the face of investor pressure, limited abilities for building new oil and gas infrastructure and supply chain constraints, said Paul Rady, president and CEO of the company, during an earnings call.

The company pointed to its connections to LNG exports, saying it has about 2.3 Bcf/d of firm gas transportation going to the U.S. Gulf Coast and to the Cove Point LNG export terminal in Maryland that accounts for about 75% of its gas production. About 1 Bcf/d of Antero's production is sold directly to four of the seven LNG terminals operating in the U.S., executives said.

"We don't need really any further pipelines to be built to have our LNG exposure," CFO Michael Kennedy said. "We're already at 75% of our gas, so we're in a good position."

Majors eye US supplies

Exxon Mobil Corp. is looking to grow its LNG business, according to President and CEO Darren Woods. "We're going to continue to look for opportunities in LNG," Woods said during an April 29 earnings call. "It's an important part of the portfolio."

The executive described Exxon's investment in the Golden Pass LNG facility it is building with Qatar Petroleum in Texas as "a really important anchor supply point" in the U.S.

The LNG operations of Exxon's fellow integrated oil and gas giant Chevron Corp. have historically focused on the Pacific Basin, where it operates the Gorgon and Wheatstone LNG projects in Australia. But the prospects for the Atlantic Basin, where Chevron operates a West African LNG facility in Angola, look different now, Chairman and CEO Michael Wirth told investors on April 29.

"LNG is on everybody's mind these days," Wirth said. "It's important [in] meeting Europe's needs. It's important [in] delivering a lower carbon energy system globally. And we see this strong market here in the near term."

Wirth said the company is in talks with U.S. LNG developers and that "it may make sense for us to have some U.S. supply," but he declined to elaborate. Chevron has also been exploring potential expansion projects in the Middle East.

"We'd like to grow our LNG position," Wirth said. "The world needs it."

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