Twenty years ago, experts were nearly certain that the U.S. was on the brink of experiencing natural gas shortages. Supplies had been in decline for years, and prices were rising.

ConocoPhillips (NYSE: COP) and ExxonMobil (NYSE: XOM) made large acquisitions of natural gas companies, betting on a future with much higher natural gas prices.

One company, Cheniere Energy, Inc. (NYSE: LNG) was building a liquefied natural gas (LNG) import terminal to help address the expected supply shortfall.

By 2005, U.S. natural gas production had begun to decline. Natural gas spot prices regularly spiked above $10 per million British thermal units (MMBtu) and sometimes as high as $15/MMBtu.

An Unexpected Development

What happened next was unanticipated. Natural gas producers were experimenting with combining hydraulic fracturing (“fracking”) and horizontal drilling. Their success would change everything.

Instead of an ongoing decline, by 2007 U.S. natural gas production was moving substantially higher. The industry was in the early stages of the largest expansion of U.S. natural gas production in its history.

A decade later, natural gas production was 50% higher than the level in 2007. Today, it is 86% higher and still climbing. Along the way, Cheniere converted its LNG import terminal into an LNG export terminal and became a major player in this brand-new business.

Natural gas expansion was so dramatic, that in 2016, the U.S. began to sharply increase LNG exports. At first, exports were a drop in the bucket compared to those of Qatar and Australia — the world’s two largest LNG exporters. But the rise was steep, and by 2022 it looked like a possibility that the U.S. could soon overtake those countries as the world’s largest LNG exporter.

That has now happened, according to data compiled by Bloomberg. Data through the end of December 2023 showed record U.S. exports of 91.2 million metric tons. The U.S. became the world’s leading LNG exporter in 2023, surpassing Qatar and Australia.

The increase in production was attributed to the return of Freeport LNG to full service, adding 6 million metric tons, and the full-year output of Venture Global LNG’s Calcasieu Pass facility, which added 3 million metric tons more than in 2022.

Last week Cheniere Energy — now a $40 billion company — and Cheniere Energy Partners (NYSE: CQP) announced that they were approved for uplisting to the New York Stock Exchange from the NYSE American.

Environmentalists Unhappy

But environmentalists aren’t happy about the burgeoning U.S. LNG export business. They argue that it increases carbon dioxide emissions. As I pointed out in a recent Forbes article, this isn’t true. The expansion of natural gas enabled power companies to switch from coal. This led the U.S. to become the world’s leading country at reducing carbon emissions over the past 15 years.

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But the Biden Administration, bowing to these pressures in an election season, announced a “temporary pause on pending approvals of liquefied natural gas exports.” The key reason cited for the pause was climate change concerns.

Ironically, by restricting LNG from the rest of the world, it makes it all the more likely that these countries will continue to rely on coal for power.

Nevertheless, becoming the world’s top LNG exporter is an extraordinary achievement for U.S. natural gas producers. But it is even more impressive when you consider the state of the industry in 2005. It turns out that predicting the future is hard, even for an integrated supermajor like ExxonMobil.

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