After the U.S. exported a record amount of liquefied natural gas in late March, the coronavirus pandemic — paired with warm weather — cut that amount by more than half in June, according to IHS Markit data.
Why it matters: Politically, it's a blow to President Trump’s energy agenda. Economically, it's contributing to job losses and project delays in the oil-and-gas industry, which is now a significant part of the economy.
By the numbers:
- Daily deliveries of natural gas to U.S. facilities that liquefy and then export natural gas hit a record 9.8 billion cubic feet a day in late March.
- By June, that number fell to 4 billion.
Where it stands: The pandemic isn’t hitting natural gas quite as hard as oil because gas is used in electricity and heating — things we still use in lockdowns.
- Nonetheless, it’s set to decline after big growth in recent years. Global production is projected to decline by 2.6% this year, consultancy Rystad Energy said this week.
The big picture: With America becoming the world’s biggest producer of oil and natural gas, companies have raced to build massive, multi-billion-dollar facilities to liquefy and then ship natural gas all over the world.
- Several have begun operating in recent years, but more than a dozen are still either awaiting government approval or not yet complete, according to government data.
Threat level: The pandemic is just the latest headwind for the industry, according to Erin Blanton, who leads the natural-gas program at Columbia University's Center on Global Energy Policy.
- Trump's ongoing trade war with China has cut off the largest growth market for U.S. natural gas, while persistently warmer weather thanks largely to climate change and an abundant supply of the fuel all over the world — a problem also facing oil — does not bode well for projects not yet operating, Blanton says.
- "It will be very challenging for additional U.S. projects to make final investment decisions for the foreseeable future after the experience of this year," she told Axios by email.
- It’s common to have more projects proposed than will actually be built, writes Matthew Shruhan, a senior analyst at IHS Markit.
What we’re watching: It will be telling to what degree this downturn compels some oil-and-gas companies, like Shell and other European firms, that are looking to evolve into broader energy producers to lessen their investment in natural gas in favor of renewable energy.
Go deeper: China led the world in energy growth in 2019
