What a year it was! For most of the year, the news was about new milestones in terms of U.S. energy production and exports.
In 2018 the U.S. crude oil, natural gas and natural gas liquids (NGLs) production surged, breaking new output records almost every month. Crude oil production grew by 1.7 million barrels per day (MMb/d) during the year.
The U.S. has become the largest oil producer in the world. Supported by favorable prices and increased global demand, NGL production increased 27%, while natural gas production rose 10 Bcf/d due in large part to associated gas produced with crude oil in the Permian Basin.
While the spike in natural gas production has led to issues regarding a lack of pipeline takeaway capacity, announced new pipelines, LNG export facilities and global demand are creating a favorable long-term environment.
The good news keeps coming for exports as well.
In 2018, U.S. LNG exports surged as new facilities came online to meet growing global demand. Cheniere continued to expand its export capabilities and destinations from its Sabine Pass Louisiana facility and began making shipments from its Corpus Christi facility.
Dominion’s Cove Point, Maryland facility began exporting as well. Several additional LNG projects are moving ahead with new facilities coming online in 2019 and beyond. The US also achieved new record levels of crude oil exports, which exceeded 3 MMb/d. A number of new crude oil export facilities have been announced along the Gulf Coast to accommodate accelerating crude exports.
All of these achievements reflect continued success in the U.S. march toward greater energy dominance, and for the most part, 2018 was a good year in support of that goal in terms of both economics and policy.
Two notable exceptions were the implementation of steel tariffs, which increased the cost of US energy projects, and growing concerns over trade relations with China. Adding to concerns toward the end of the year, crude oil prices fell steeply following a global supply glut and increasing worries over a slowing global economy.
In addition, Democrats gained control of the U.S. House of Representatives, shifting the lower House to focus on policies less favorable to oil and gas in 2019. Finally, global equity markets took a beating, with energy stocks among the hardest hit.
So, will we continue our march toward energy dominance in 2019, or will we pull back based on some of the factors outlined above?
For starters, divided government will prevent major legislative actions that might be harmful to industry, as the Senate is controlled by Republicans and the White House has veto power.
Nonetheless, anti-fossil energy legislation will be introduced and rigorous oversight will be conducted over the Administration’s energy policies.
All the while, the president will continue to pursue executive actions that are helpful to domestic production, distribution and exports, steel tariff and trade policies notwithstanding.
Also, while the current political climate would make it a very heavy lift, keep an eye out for potential infrastructure legislation, which is often discussed a place where compromise might prevail.
As to commodity prices, oil seems to have recovered somewhat in early January as demand remains strong an OPEC continues to send signals that it will keep its production levels in check.
Global equity markets in turn appear to have recovered somewhat, and the economy continues to appear healthy, all of which is good news for all energy commodities and products.
As nations continue to pursue their climate goals, the future for natural gas is bright, as it will play a pivotal role in reducing greenhouse gas emissions and air pollution. While 2019 might not be as record setting as 2018, it could still prove to be a good year to advance the quest for energy dominance.
Jack Belcher is senior vice president of Cornerstone Energy Solutions and advises energy, transportation and financial services clients on government relations, regulatory affairs, risk management, ESG management, coalition building and stakeholder relations. He is also managing director of the National Ocean Policy Coalition.
© 2021 Newsmax Finance. All rights reserved.