In addition to a preview of the next month's USAEE/IAEE North American Conference, in this edition of the newsletter we also have the opportunity to share the second part of this report originally published in the S&P Global Market Intelligence blog, "Research & Insights," where the full Phase 2 report can be found. Part 1 can be found in our prior USAEE e-newsletter.
In the S&P Global December 2024 Phase 1 report, we examined the remarkable rise of the US liquefied natural gas (LNG) industry. In less than a decade, this sector has become a major export industry, contributing more than $400 billion to U.S. GDP and supporting hundreds of thousands of American jobs. This development has not only contributed positively to the US economy and export earnings but has also strengthened the international position of the United States and deepened relations with many other countries.
This Phase 2 companion study expands and complements key aspects of our first phase study:
On the emissions front, Phase 2’s central finding is that increasing US LNG exports leads to 780 million tonnes of CO2e (GWP20) lower GHG emissions globally between 2028 and 2040 than would be the case if demand were met by the likely alternative sources. The study demonstrates why the bulk of demand – absent US LNG – would largely be met with other hydrocarbons, not renewables. This future saving equates to total road transport emissions in the UK over the same period. The reason for these savings is driven by the lower GHG intensity of US LNG compared to the average intensity of the combined energy sources that would replace that LNG in global markets.
This analysis shows that end-use combustion accounts for a significant 57 to 87% of the lifecycle intensity of coal, oil, gas and LNG. Varying levels of methane emissions in the supply chain prior to end-use lead to significant differences between the sources and pathways of each fuel. This highlights the need for frequent and reliable monitoring of methane emissions and the benefits of transparency in GHG intensity.
From a macroeconomic perspective, the Phase 1 Base Case outlook demonstrated that US LNG exports can contribute an additional $1.3 trillion to US GDP through 2040. This Phase 2 report illustrates that the economic impact extends beyond the seven core producing states, with 37% of jobs and 30% of GDP contributions occurring in non-producing areas.
The third part of the report examines the economic benefits of ending one major and costly distortion in the US energy system. This would be achieved by removing bottlenecks in infrastructure especially across the Northeast region. While the Northeast region has sufficient proved reserves to meet all U.S. demand for 17 years, existing pipeline constraints hinder optimal production. These result in gas prices in New York and Boston that are 15–40% higher than the national annual average, and 145% and 160% higher in the key winter heating month of January – imposing a heavy and unnecessary cost burden on consumers. Expanding egress capacity from the giant Marcellus supply by about 6 billion cubic feet per day could reduce January prices by 20% and 30%, respectively, from 2028 to 2040 (17-27% annualized), resulting in cumulative savings of $76 billion for consumers by 2040.
The regional impact of US LNG export value chain reaches all US states — supply chain integration is extensive, broad and homegrown
US LNG industry growth is expected to double its US economic footprint to 2040.
Unlocking the full potential of Marcellus and Utica shale gas through additional pipeline capacity would lead to lower prices and consumer savings, particularly in the Northeast
Read the the full Phase 2 report on the S&P Global Market Intelligence blog, "Research & Insights."