US gas producers shrug off low prices, bet on LNG boom

HOUSTON, Mar 24 (Reuters): Energy executives say they are looking past current ultra-cheap gas prices and betting on a coming wave of new liquefied natural gas (LNG) plants to lift demand - and prices - for the fuel.
Natural gas prices have fallen by one-third this year, undercut by a warmer winter, outages at LNG facilities and higher-than-expected output. The growth in solar and wind power and a pause on new US LNG export permit reviews also have clouded the outlook for future gas demand.
"Domestic US markets are oversupplied," said Chad Zamarin, a senior vice president at gas pipeline operator Williams Cos.
"It will certainly take some time for LNG coming out of the U.S. and a bit of a slowdown in supply to rebalance," said Zamarin, speaking on the sidelines of the CERAWeek energy conference in Houston.
Oversupply in West Texas, home of the top US oilfield, had prices this week at a negative 26 cents per million British thermal units (mmBtu), requiring gas producers to pay someone to take the fuel. U.S. gas prices were trading at $1.66 per mmBtu on Friday, down 74% from the average price in 2022.
"Our pipeline infrastructure is maxed out. It's going to make it very difficult for us to connect markets," said Toby Rice, CEO of the largest US gas producer, EQT Corp. He said permitting reforms are needed to build new lines.
New pipelines and LNG processing plants would allow the US to export the gas now clogging those West Texas lines and supply sustained energy while sun and wind power grow. China and India are moving away from coal to natural gas for electric power, and Europe has turned to the US to replace Russian pipeline gas.
"Gas will continue to play a key role in the future. It's not just a transition (fuel), if you will, we look at it (gas) as being a destination for decades to come," said Clay Neff, Chevron's president for international exploration and production.
Lorenzo Simonelli, CEO of LNG equipment supplier Baker Hughes, said if the US fails to approve new LNG export plants, demand for the fuel will still be met, mainly from projects in Qatar, Argentina and Africa.