Record demand and few supply alternatives

Demand for natural gas from LNG producers in the U.S. hit an all-time high on December 31.

At 15.3 billion cu ft, it’s a sign of things to come.

Because Europe will be needing more LNG now that no pipeline gas is coming from Russia. And Norway has no plans to double its gas output or anything.

So, the options Europe has are:

• U.S. LNG

• Qatari LNG

Only the Qataris said they won’t play ball if the EU’s going to tax their emissions.

The other alternative—Azeri gas—is not coming soon enough. Like Norway, Azerbaijan has yet to boost production enough.

Our LNG exporters are in for a strong year, or a couple.

The EIA expects demand for natgas from LNG makers to hit 20.3 bcfd next year. Then it could rise further to 24.2 bcfd in 2027.

Time to get serious about the transition, Europe…

...and about deindustrialization.

Europe really went and painted itself into a corner. It can’t quit gas. It would mean turning into a third-world continent. But it can’t stay competitive with expensive gas.

And U.S. gas, reliable as it is, is not cheap. It just comes from a long way away. You can’t do anything about geography.

So, Europe will import more LNG from us going forward. And its industry will keep dying slowly. Until only the strongest survive.

Or they can cover everything with panels and turbines, and hope for the best.

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Cash over barrels

The past couple of years saw a flurry of deals that significantly curbed the number of independents operating in the shale plays.

Big Oil was buying assets left and right.

It had the cash from those record profits for 2022 that got the Biden admin’s blood boiling. Now, it’s up to them what they do with production.

They have signaled growth is not top priority.

Cash is.

“We’re not going to have the explosive growth that we’ve seen,” per one Exxon exec.

The joke is on the IEA and all the others that kept predicting strong growth in U.S. shale.

• Private company rig operations in the Permian are down to 25% of the total.

• Wildcatters used to run 50% of Permian rigs back in 2022.

• The number is going to go down further.

Because consolidation is not over, according to analysts.

A “giant factory”

This may be the future of the Permian. Big Oil will keep buying out smaller operators. It will eventually attain near full control of production.

At least, that’s what analysts expect.

And it’s bad news for the jobs market. Big Oil is big on efficiency.

And efficiency means doing more with less—and fewer jobs.

Unless, of course, all those peak demand predictions turn out as wrong as the supply growth predictions.

But when has the IEA ever been wrong on their predictions…?