In January, for the first time in 60 years, it was announced that the US had become a net exporter of natural gas.
The boom in shale gas exploration over the past decade has left the US with more natural gas than it can use. On top of that, some suggest that “2019 could be the busiest year of LNG” ever, driven by an uptick in large-scale projects.
The US has so much gas, in fact, that by 2022 it is predicted to be a net energy exporter, and therefore considered energy independent – for the first time since 1953.
The newfound energy independence of the US will have an impact on energy policies and markets around the world.
Thanks in part to the increased availability of LNG, the International Gas Union’s 2018 Global Gas Report tips gas to grow from 22% to 24% of the global energy mix by 2035. In doing so it will overtake coal as the second biggest global energy source, behind oil.
MHI’s own Oil & Gas Outlook reveals, among other things, that natural gas’s rise will coincide with the anticipated plateau in oil demand, only amplifying its importance in the future global energy mix.
US LNG’s biggest impact will be aiding global economic growth, particularly in Asia.
Data from the US Energy Information Administration (EIA) shows Asia is already the biggest consumer of US natural gas exports.
And this Asian demand for natural gas is accelerating rapidly. According to McKinsey, by 2030, 65% of global gas demand growth will come from Asia.
A massive construction program to build a series of multi-billion dollar Liquefied Natural Gas (LNG) export terminals is under way across the US. Many of the new facilities are focused almost exclusively on the Asian market.
But it isn’t just Asia that will increase its consumption of US sourced LNG.
EIA data shows the Middle East and Europe are already importing LNG from the US, and this will grow as more US export capacity becomes available.
For example, Saudi Arabia is looking to significantly increase its imports of natural gas for power generation, shifting away from oil-fired plants and freeing up more of its oil reserves to be exported overseas.
And in Europe, US LNG could introduce more competition into the market. With North Sea gas reserves dwindling, European nations are looking to diversify their suppliers to avoid becoming reliant on a single region for sourcing LNG supplies.
IGU’s Global Gas Report shows gas demand is already on the rise: 2017’s increase in demand was its highest for a decade, and more than double the average rate of increase in global gas demand over the past five years.
And the rapid increase in US natural gas exports will not only affect market dynamics.
An abundant supply of LNG will also encourage many countries to switch from coal and oil-fired power plants to cleaner, gas-powered plants.
Compared with coal, modern natural gas power generation results in 65% – 70% fewer carbon dioxide emissions per unit of electricity.
Concerns about air quality in countries such as India and China are driving initiatives to build cleaner electricity generation infrastructure, like natural gas-fired power plants and renewables.
McKinsey predicts natural gas will be the fastest growing fossil fuel on the planet by 2030. This rise is driven by both the substantial Asian demand for natural gas, and a slowing global demand for oil thanks to the rise in fuel-efficient and electric vehicles.
Wherever you look, nations are switching to natural gas for environmental and economic reasons. And US natural gas is at the heart of this conversion.
To move all of this natural gas across the oceans from the US to Asia and elsewhere requires a new fleet of specially designed LNG carriers.
The start of 2018 was a record period for the construction of new LNG carriers, with 13 new vessels built and 10 ordered in January and February alone. If all orders are fulfilled, a record 62 new LNG carriers will be built in 2018, significantly up from the 37 delivered in 2017.
The majority of these new LNG carriers are being built in shipyards in China, Japan and South Korea. In most cases these carriers will then make return trips to the US to provide the natural gas to power Asia’s economic growth.
For example, Freeport LNG in Texas will begin operating in 2019, with much of its natural gas secured via long term contracts by companies in Japan and South Korea.
One of these companies, Chubu Electric Power, commissioned Mitsubishi Heavy Industries to build two new LNG carriers to transport natural gas from Freeport to Japan.
These carriers are next-generation vessels with hybrid propulsion plant whose steam turbine and gas engines can run on gas, liquid fuel, or both. They have been designed to a width that allows them to pass through the Panama Canal from US LNG export terminals in the Gulf of Mexico to their Asian destinations.
The first of these carriers to leave MHI’s Nagasaki Shipyard & Machinery Works are bound for another US LNG export terminal. These carriers, “Diamond Gas Orchid” and “Diamond Gas Rose”, will transport LNG to Asia from the Cameron LNG facility in Louisiana.
Americans may take little notice of the newly christened ships arriving at their shores. Perhaps they should look more closely: they are a symbol of America’s newfound economic strength as a net energy exporter.
This article originally appeared on Forbes