The Henry Hub natural gas benchmark settled at $8.415 a million British thermal units on Wednesday, more than double the price at the start of the year and far above the $3 average of the previous 10 years.
A persistent source of demand are plants that liquefy the gas for export overseas. The coastal facilities, a critical piece of Europe’s plans to cut Russian supplies after Moscov€s invasion of Ukraine, have been running at maximum capacity during the rally.
Shale gas producers, whose headlong growth in the 2010s depressed prices and made US liquefied natural gas export projects viable, have also been slow to increase output in response to the market surge.
Demand from LNG plants has averaged more than 12.3bn cubic feet of gas a day (equivalent to 127bn cubic metres a year) since the start of March — about 17 per cent more than last year and almost as much as is consumed by the US residential sector, according to Refinitiv.
More shipments are anticipated this year as Cheniere Energy expands an export plant in Louisiana and rival Venture Global opens one in the state. The Energy Information Administration forecasts LNG exports, which began on the Gulf of Mexico in 2016, will increase another 25 per cent between 2021 and 2022.
Gas in the US remains far cheaper than in Europe, where prices were almost $37 a million Btu this week, or in Asia, where they were $23-5. The disparity creates an incentive to add more export plants.