An existing pipeline connection can make an LNG export location more attractive without guaranteeing a market for its output. EIA's March 4, 2016 account identified the Gulf Coast's extensive network as a reason for terminal development there. It also noted that many export projects used sites that had served, or might continue serving, as import terminals. Infrastructure inherited from an earlier market can matter in a new one. [30052][25232]

The same history warns against treating physical assets as proof of demand. EIA described falling LNG imports as domestic production grew, leaving some newer import terminals barely used and reducing use of older ones. Our market interpretation is that an infrastructure foothold and a sound commercial forecast are different advantages. The agency account does not quantify a particular developer's cost edge or prospective return. [30052][25232]

EIA's February 22, 2017 outlook expected four facilities under construction to join Sabine Pass by 2021. Their combined operational export capacity was projected at 9.2 billion cubic feet per day. Yet the outlook also anticipated slower LNG export growth after 2021 as other global suppliers increased competition. The capacity projection was therefore not a promise that every available unit would secure a buyer. [30052][25232]

For competition analysis, the useful pairing is inherited access against contestable demand. Existing sites and pipelines help explain where projects appear; rival suppliers help explain why that is not enough. Both documents come from EIA, rather than independent commercial assessments. Testing the opportunity would require evidence about completed operations and sales, not simply adding proposed capacity to an optimistic demand story. [30052][25232]

Source documents

  1. Liquefied natural gas exports expected to drive growth in U.S. natural gas tradehttps://www.eia.gov/todayinenergy/detail.php?id=30052
  2. Growth in domestic natural gas production leads to development of LNG export terminalshttps://www.eia.gov/todayinenergy/detail.php?id=25232