A new report from the nonprofit Global Energy Monitor paints a troubling picture of LNG as it faces growing competition from renewables.
Citing Tellurian’s proposed Driftwood LNG project in Calcasieu Parish as “a stark example of the roller coaster confronting U.S. developers,” GEM’s study, entitled Nervous Money, notes that 21 export terminals totaling 265 MTPA of capacity continue to report FID or other serious delays amid an uncertain market. Those terminals represent 38% of the 700 MTPA of export capacity under development worldwide.
In January 2020, Tellurian’s stock was selling for $8.69 per share, but plunged by 92% to $0.70 cents per share in September, earning the company a delisting notice from Nasdaq. Two months later, CEO Meg Gentle left the company. In an April 2021 research note, Morgan Stanley estimated that Tellurian had only enough cash to fund another four to six months of expenses. Chairman Charif Souki went on YouTube to denounce short sellers seeing blood in the water.
Some relief for Tellurian arrived in May and June, with commitments by Vitol and Gunvor to both enter into 10-year, 3 MPTA purchasing deals. But according to industry analyst Clark Williams-Derry, the terms of the agreements were shorter than typical and that liquefaction fees were not guaranteed.
Once regarded as a potential climate solution, LNG is increasingly regarded as a climate problem, according to the report—particularly for European buyers. According to the IEA, inter-regional LNG trade would need to decline rapidly after 2025 under a 2050 net zero
scenario. Additionally, GEM predicts aggressive expansion of capacity in low-production-cost Qatar and the Russian Arctic has increased risks to higher cost U.S. LNG export developers.
However, LNG advocates tell Natural Gas Intelligence the fuel will be essential in the energy transition. A spokesperson for the Center for LNG noted that global demand is expected to grow in part because of the emissions reductions when switched with coal.
“The U.S. LNG industry is striving to create a clean energy future for all, and the partnership natural gas and renewables have is vital now and in the future for reducing emissions,” a spokesperson for the Center for LNG tells the publication. “LNG plays a vital role in ensuring stable baseload power and allowing renewables to grow further in power mixes across the globe. … As the world strives for a clean energy future, natural gas and LNG will be vital partners.”
GEM, which tracks energy projects around the world, receives funding from organizations including the Rockefeller Family Fund, the Sierra Club Foundation, and the Sustainable Markets Initiative.