China has the potential to be a huge market for U.S. natural gas. According to the U.S. Energy Information Administration, earlier this year China became the second largest importer of liquefied natural gas (LNG) in the world. China had long been in third place, importing a little over 2 billion cubic feet per day (Bcf/d) between 2013 and 2015 while South Korea imported about 5 Bcf/d.
China’s new air pollution policies are pushing out coal and replacing it with natural gas, though, and China actually hit 7.8 Bcf/d of imports in December 2017. Energy-poor Japan, which as an island has no pipelines to connect with, continues to be the world’s largest importer of LNG, which is brought in by ship.
Two recent announcements should make the Chinese market even more appealing to American natural gas exporters. First, on May 25, China’s rate setters, their National Development and Reform Commission, decided to allow residential natural gas prices to rise closer to market levels by this time next year. China has been holding natural gas prices down for households, and allowing prices to rise should help producers.
In ever better news, on May 24 the chief executive of the state-run energy company PetroChina stated that the company would be studying four additional import terminals. These could potentially be added to the 17 already in place and one under construction. China is also increasing its storage capacity as well, which is necessary when relying on LNG deliveries. By 2023, China is expected to be receiving 26 million tonnes of LNG annually, up from about 9 million now. Pres. Trump is also pressuring China to reduce its trade imbalance with the U.S., and increased purchases of LNG is one way that China might close the gap.
A huge amount of the gas going to China will be coming from the Marcellus shale, or at least made possible because of the surplus created by the Marcellus shale. If you want to try your hand producing in the Marcellus, the experts at Cimmaron Land can help you secure the rights. Just call us at (412) 212-7517.