US LNG Buildout Sparks Capacity Concerns

Por Amy McLellan

With global liquefied natural gas (LNG) demand rising and energy security concerns reshaping investment priorities, U.S. projects are accelerating, but not without short-term uncertainty and concerns about manufacturing and logistics capacity.

In a volatile world, the U.S. LNG market is set to boom, with US$416.6 billion of capex set to unlock a wave of projects through to the early 2030s.

Amanda Duhon, VP and regional director for North & Central America at the Energy Industries Council (EIC), told listeners at a Breakbulk Live Stage panel session in Houston that the EIC’s global capex tracking database has identified 54 export projects spanning liquefaction terminals, expansions, storage, receiving infrastructure and floating LNG across a spectrum of readiness, ranging from execution-ready developments through to those still progressing through feasibility, pre-FEED, FEED and final investment decision.

Just 10 developers account for 29 of the 54 projects — that’s US$343.9 billion of capex being directed by a relatively small number of players, among them Venture Global, Sempra, NextDecade, Woodside and Cheniere. Key contractors include Bechtel, Kiewit, Worley, Black & Veatch, Matrix Service, Samsung Heavy Industries and Technip Energies.

“This highlights that execution capacity is becoming a strategic advantage,” said Duhon. “A relatively small group of developers and contractors will determine how much of this LNG pipeline ultimately moves forward, making execution capability just as important as market demand.”

A concentration of FID activity is expected around 2026 and 2027, with projects such as Texas LNG, Rio Grande, Corpus Christi, Plaquemines, CP II, Alaska LNG and Delfin FLNG progressing through key decision milestones. Most of these projects are concentrated in Louisiana and Texas and along the Gulf Coast region, with Duhon pointing out that many projects will compete for access to contractors, suppliers, skilled labor, fabrication yards and logistics.

Vusal Nazarov, global category senior manager for logistics and distribution at Baker Hughes, said developers and LNG project owners had learned lessons in the last growth cycle, increasingly including logistics and supply chain partners in the project design phase to avoid issues later down the road. However, projections of a 50% increase in LNG export capacity means many of these projects will be competing for the same resources at the same time, which could result in bottlenecks.

“Just for gas turbines, the manufacturing lead time is 12 to 20 months,” Nazarov said. “And if demand goes up, the supply lead time will go up, and it will impact your schedule.”

This is where standardization and modularization could help, he said. “Moving more work toward a controlled fabrication environment allows developers to tackle productivity and also quality issues, specifically when they're dealing with tough site conditions and the shortage of skilled workers,” he said.

Fellow panelist Hilary Soileau, associate at K&L Gates, said the simultaneous buildout of projects could cause additional issues. “Congestion can be an operational risk. We’re talking about narrow waterways — large vessels and projects that are going online in the same waterways that are already hosting all of these ships and terminals.”

Nazarov said the winners in 2030 will not be those projects that have the most LNG resources, but those that can deliver on schedule and within budget, while managing supply chain risks.

“Early engagement of logistics and early engagement of procurement is very important,” he said. “When multiple projects take off at the same time, it’s really, really hard to find capacity. I believe logistics readiness will be one of the major criteria for the final investment decisions for 2030 projects.”

Top photo (L-R): Amanda Duhon, Vusal Nazarov, Hilary Soileau. Credit: Marco Wang Photography