US gas market mostly spared from new tariffs

Market: Electricity, Natural gas
03/04/25

The US natural gas market was largely unaffected by massive tariffs imposed by President Donald Trump on Wednesday, as they excluded most energy products crossing the US-Canada and US-Mexico borders.

The primary effect on the US natural gas market from Trump's tariffs continues to stem from duties levied on non-energy goods used by the oil and gas industry, including steel and specialized pipeline components like valves and compressors that are imported from overseas, a broad swath of analysts and groups representing the industry told Argus.

Virtually all natural gas, along with other energy commodities like oil and refined products, will continue to be imported into the US from Mexico and Canada without tariffs, as they are covered by the US-Mexico-Canada (USMCA) free trade agreement. One exception is gas imported from Trinidad and Tobago by the Saint John LNG import terminal in New Brunswick, Canada, most of which is sent over the border into New England and which would not be subject to USMCA, though how cross-border trade of those molecules would be enforced is unclear.

There are insufficient US mills and forges currently licensed by the American Petroleum Institute (API) to produce several critical pipeline components, one prominent trade group representative told Argus. It will take time to build up that manufacturing capacity, and in the meantime, expansion of US oil and gas infrastructure would be delayed. US oil and gas trade groups including API, the Independent Petroleum Association of America and the American Exploration and Production Council have put out statements in recent months warning that tariffs threaten the industry. The Interstate Natural Gas Association of America has called on the Trump administration to to develop "targeted exceptions" to the tariffs for certain energy infrastructure components.

Tariffs on input goods for natural gas pipelines could also affect the Trump administration's AI data center ambitions, which Goldman Sachs said could require the construction of 6.1 Bcf/d of new gas pipeline capacity from 2024-2030.

US crude prices will likely be lower in 2025 because of tariff-induced market volatility, though producers' hedge portfolios should largely protect cash flows, so US crude production will probably not be significantly impacted, said Josephine Mills, analyst at Enverus Intelligence Research. As a result, supply of US associated gas will be largely unaffected as well.

Steep tariffs on other energy infrastructure, including solar panels from southeast Asia, could hurt other fuel sources to the competitive advantage of US gas, though this would be partly offset by price hikes on steel and other natural gas infrastructure, said analysts at Gelber and Associates.

The Trump administration "will be very careful not to inflate domestic oil or gas prices, given the political risk that would entail," PVM Oil Associates analyst Tamas Varga told Argus. "Its strategy appears to be aimed at lowering energy prices to mitigate the inflationary effects of punitive tariffs."

By Julian Hast

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16/04/25

Japan to develop geothermal power under net zero plan

Osaka, 16 April (Argus) — The Japanese government is gearing up to develop geothermal energy, as the clean power can help to decarbonise the power sector with stable output, unlike weather-dependent renewables such as solar and wind. The trade and industry ministry Meti on 14 April launched a public-private council to discuss the development of next-generation geothermal energy, aiming to formulate a draft guideline, including capacity and cost targets, by around October this year. The new technology could lift the country's potential geothermal capacity to at least 77GW, compared with 23.5GW based on conventional methods, according to the council. The draft plan aims to establish the next-generation geothermal technology as early as the 2030s, to expand the use of the clean energy with competitive prices toward 2040, while tacking geological challenges, such as fault and complex geology, in Japan. Should the next-generation technology, such as closed-loop and supercritical geothermal, prove practical, Japan could utilise its potential, said Meti minister Yoji Muto on 15 April. Japan could consider exporting the next-generation technology globally, as it has around 70pc global share in conventional geothermal turbines, he added. The geothermal strategy is in line with the country's new strategic energy plan (SEP) , which was published in February, as well as prime minister Shigeru Ishiba's push to develop geothermal capacity. Ishiba had focused on less-utilised and high potential geothermal, as well as micro-hydropower, during his [campaign for the ruling Liberal Democratic Party presidential election](https://direct.argusmedia.com/newsandanalysis/article/2608517) last year. The SEP assumes geothermal will account for 1-2pc of Japan's power mix in the April 2040-March 2041 fiscal year, which is relatively marginal compared with other renewables such as solar at 23-29pc, wind at 4-8pc, hydroelectric at 8-10pc and biomass at 5-6pc. But even the small share would be much higher compared with its actual share of 0.3pc of total power generation in 2023-24. Diversification of renewable power sources would be necessary to achieve Japan's plan to reduce its greenhouse gas emissions by 60pc in 2035-36 and by 73pc in 2040-41, respectively, against the 2013-14 level, before achieving its net zero goal in 2050. Under the SEP, Tokyo aims to reduce its dependence on thermal power to 30-40pc in 2040-41 from 71pc in 2024. Japanese private firms are already involved in further developing domestic and overseas geothermal projects. Japanese utility Hokkaido Electric Power and construction firm Obayashi said on 16 April that they will study potential geothermal resources in Hokkaido during April 2025-February 2026, taking advantage of subsidies provided by state-owned energy agency Jogmec. Japanese battery maker Panasonic Energy said on 8 April that it has signed a power purchase agreement with regional utility Kyushu Electric Power's renewable arm Kyushu Mirai Energy to secure around 50GWh/yr of geothermal-based electricity from 1 April. The stable geothermal supplies, unaffected by weather, could double a renewable ratio in its domestic power consumption to around 30pc, Panasonic said. By Motoko Hasegawa Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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Dozens of US coal plants eligible for MATS extension

15/04/25

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15/04/25

Dozens of US coal plants eligible for MATS extension

Cheyenne, 15 April (Argus) — The White House has identified more than 60 fossil fuel-fired power plants that will have two extra years to comply with the more stringent mercury and air toxics standards (MATS) finalized in 2024. Under a proclamation signed by US president Donald Trump last week, the plants on the list will be able to operate under whatever existing mercury and air toxics standards they currently are subject to until 8 July 2029. That is two years after the compliance deadline put in place in May 2024. The Environmental Protection Agency (EPA) rules finalized last year tightened mercury and air toxics standards for coal- and oil-fired units by 67pc, included new emissions-monitoring requirements and added standards for lignite-fired coal plants that put them in line with those for other coal plants. EPA in March said it was reviewing the new standards and said companies could seek exemptions to the mercury rule and other emissions rules. Trump followed that up last week with a proclamation that certain generating facilities would be given a two-year exemption in complying with the 2024 rule. The White House released the list of exempt power plants late on 14 April. Most of the plants on the list are coal-fired generators, some of which were scheduled for retirement by the end of 2027. These include Tennessee Valley Authority's Kingston plant and one unit of its Cumberland plant, as well as Vistra Energy's Kincaid, Baldwin and Newton plants and two coal units of Vistra's Miami Fort plant. The two coal units at Southern Company's Victor J Daniel plant in Mississippi also have been exempted from the new mercury and air toxics rules for two years. Southern had planned on retiring those units by the end of 2027, but in February, the Mississippi Public Service Commission approved two special contracts that were expected to need unit 2 of the Daniel plant and possibly a unit of a natural gas plant to run into the 2030s. Some other coal plant units owned by Southern, TVA and Vistra also are now exempt from the July 2027 mercury and air toxics compliance deadline. So are some plant units owned by East Kentucky Power Cooperative (EKPC), NRG, Ameren and Entergy. At least two natural gas plant units — unit 5 of Southern's Plant Barry and City Utilities of Springfield's John Twitty Energy Center, which has coal and natural gas generation — are exempt from the July 2027 deadline. So is unit 5 of Entergy's RS Nelson plant, which runs on petroleum coke. Essentially all of the other units in the White House's list are coal units, including Otter Tail Power's Big Stone and Coyote Station plants in North Dakota. Otter Tail said it had requested the exemptions "to avoid making unnecessary expenditures" if EPA decides to roll back the 2024 rule. EKPC said it was "grateful" its request to exempt the Spurlock and Cooper coal-fired power plants in Kentucky was granted and that the company "will continue to operate the plants in accordance with all market and environmental rules." NRG said it was still reviewing the order, but did not expect it to have any effect on its plans. TVA, Southern, Vistra and owners of other power plants given compliance extensions did not respond to requests for comment. By Courtney Schlisserman Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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VG begins contracted LNG deliveries at Calcasieu Pass

15/04/25

News

15/04/25

VG begins contracted LNG deliveries at Calcasieu Pass

Houston, 15 April (Argus) — US LNG exporter Venture Global began deliveries of long-term contractual cargoes at its 12.4mn t/yr Calcasieu Pass terminal in Louisiana today after the facility started commercial operations, more than three years after producing its first LNG. "We are excited to reach this milestone and are grateful for our regulators and supply chain partners who have worked with our team to reach commercial operations as efficiently and safely as possible," said Venture Global chief executive Mike Sabel. But the long-delayed and highly contested start comes amid ongoing arbitration proceedings against Venture Global, which some customers including Shell, BP, Italian utility Edison and Spanish company Repsol argue was unjustified in deferring the contracted supplies (see offtakers table) . The LNG exporter originally sought to begin commercial operations in 2022 but cited impacts from Covid-19, two hurricanes and "major unforeseen manufacturing issues" related to one of the plant's heat recovery steam generators, equipment that helps power the facility. Because several of the plant's facilities, including the power island, were not officially placed in service with federal authorization, Venture Global maintained that the plant was not commercially operating — despite producing 444 cargoes totaling 28.2mn t of LNG (about 1.28 trillion cubic feet of natural gas) since its first in March 2022, according to Vortexa data. The start-up Tuesday comes on the final day before Venture Global could have lost control of the project. The company said in a December filing with the US Securities and Exchange Commission (SEC) that the agreement under which it had financed debt requires commercial operations to be completed by 1 June 2025. Should commercial operations have not begun 45 days prior to this date — which is Tuesday — then the agreement defaults, allowing "certain investors" to exercise control over the project. Before Tuesday, the company instead sold cargoes on the spot market for prices much higher than the terms of its offtake agreements. Calcasieu Pass produced its first LNG in January 2022 and exported its first cargo on 1 March 2022 — less than a week after Russia, then a key supplier of gas to Europe, invaded Ukraine. The facility produced its first LNG just 29 months after reaching a final investment decision (FID) on the project, compared with the industry average of four to five years. The timing of the project's start dovetailed with the war-driven volatility in the European gas market, helping Venture Global realize much larger profits than it would have under contracted volumes. The firm's liquefaction fees in 2023 and 2024 averaged $12.23/mn Btu and $7.28/mn Btu, respectively, compared with the average $1.97/mn Btu in its long-term deals, according to a company presentation in March. The lengthy commissioning process generated $19.6bn in revenue by the end of September 2024, Venture Global said in the December SEC filing. Shell estimated that Venture Global sold cargoes in 2023 at an average of $48.8mn per shipment, "raking in billions of dollars while shirking its contractual obligations", according to a filing with US energy regulator FERC in March 2024. Venture Global said in March that the customer arbitration cases are not likely to be resolved until after 2025. LNG facilities usually produce commissioning cargoes for a few months before beginning long-term contracts. But Venture Global has said its unique plant design, which uses a higher number of smaller, modular liquefaction trains compared with traditional trains, requires a longer start-up process. Calcasieu Pass LNG consists of 18 trains paired in nine blocks, and a similarly long commissioning period is expected at the first two phases of Venture Global's 27.2mn t/yr Plaquemines facility consisting of 36 trains. The company also has plans for an 18.1mn t/yr expansion at Plaquemines. An FID is expected in mid-2027, with first LNG production 18-24 months later. Venture Global estimated that its third LNG facility, the 28mn t/yr CP2 facility adjacent to Calcasieu Pass, could export up to 550 commissioning cargoes . The company expects to make an investment decision on the first phase of CP2 this year. By Tray Swanson Calcasieu Pass offtake deals Offtaker Volume, mn t/yr Contract length, yrs Shell 2.0 20 Galp 1.0 20 Sinopec 1.0 3 CNOOC 0.5 5 Edison 1.0 20 Repsol 1.0 20 PGNiG 1.5 20 BP 2.0 20 — US DOE Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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IMO GHG pricing not yet Paris deal-aligned: EU

14/04/25

News

14/04/25

IMO GHG pricing not yet Paris deal-aligned: EU

Brussels, 14 April (Argus) — The International Maritime Organisation's (IMO) global greenhouse gas (GHG) pricing mechanism "does not yet ensure the sector's full contribution to achieving the Paris Agreement goals", the European Commission has said. "Does it have everything for everybody? For sure, it doesn't," said Anna-Kaisa Itkonen, the commission's climate and energy spokesperson said. "This is often the case as an outcome from international negotiations, that not everybody gets the most optimal outcome." The IMO agreement reached last week will need to be confirmed by the organisation in October, the EU noted, even if it is a "strong foundation" and "meaningful step" towards net zero GHG emissions in global shipping by 2050. The commission will have 18 months following the IMO mechanism's formal approval to review the directive governing the bloc's emissions trading system (ETS), which currently includes maritime emissions for intra-EU voyages and those entering or leaving the bloc. By EU law, the commission will also have to report on possible "articulation or alignment" of the bloc's FuelEU Maritime regulation with the IMO, including the need to "avoid duplicating regulation of GHG emissions from maritime transport" at EU and international levels. That report should be presented, "without delay", following formal adoption of an IMO global GHG fuel standard or global GHG intensity limit. Finland's head representative at the IMO delegation talks, Anita Irmeli, told Argus that the EU's consideration of whether the approved Marpol amendments are ambitious enough won't be until "well after October". Commenting on the IMO agreement, the European Biodiesel Board (EBB) pointed to the "neutral" approach to feedstocks, including first generation biofuels. "The EBB welcomes this agreement, where all feedstocks and pathways have a role to play," EBB secretary general Xavier Noyon said. Faig Abbasov, shipping director at non-governmental organisation Transport and Environment, called for better incentives for green hydrogen. "The IMO deal creates a momentum for alternative marine fuels. But unfortunately it is the forest-destroying first generation biofuels that will get the biggest push for the next decade," he said. By Dafydd ab Iago Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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Bio-LNG could boom by early 2030s under IMO deal

14/04/25

News

14/04/25

Bio-LNG could boom by early 2030s under IMO deal

London, 14 April (Argus) — Compliance with the International Maritime Organization's (IMO) newly agreed global greenhouse gas (GHG) two-tier pricing mechanism will require LNG-powered ships to transition to bio-LNG by 2029 under the encouraged 'direct compliance' tier, or by 2033 for the minimum 'base target' tier, or else potentially incur heavy costs. The pricing mechanism was approved by IMO delegates on 11 April in London. Formal adoption will be decided in October, at the next Marine Environment Protection Committee (MEPC) meeting, when a two-thirds majority vote will be required. The text says ships must reduce their fuel intensity by a "base target" of 4pc in 2028 (see table) against 93.3g CO2e/MJ, the latter representing the average GHG fuel intensity value of international shipping in 2008. This gradually tightens to 30pc by 2035. The text defines a "direct compliance target", that starts at 17pc for 2028 and grows to 43pc by 2035. Well-to-wake emissions for LNG diesel-type engines at dual fuel slow speed are equal to 76.08g CO2e/MJ, an 18.4pc emission reduction from the IMO's 2008 benchmark. In theory, this means the average LNG-vessel is compliant with the IMO's scheme until 2029 under both maximum and minimum tiers, or until 2033 under the base target. Waste-based bio-LNG carries a GHG intensity of between 30 and -100g CO2e/MJ depending on feedstock and production, which translates to between 68.09-206.4pc GHG emissions savings, making it compliant across all tiers. However, the uptake of bio-LNG may be capped. Many LNG-capable vessels run on dual-fuel engines, meaning ship-owners may be more inclined to adopt biodiesel, ammonia or other diesel-engine applicable fuels, depending on price levels and other real-world drawbacks. The pricing mechanism establishes a levy for excessive emissions at $380 per tonne of CO2 equivalent (tCO2e) for ships compliant with the 'base' target, called Tier 2. For ships in Tier 1 — those compliant with the base target but that still have emission levels higher than the direct compliance target — the price was set at $100/tCO2e. Instead of physically transitioning to a greener fuel, ships could meet targets using 'surplus units', which will be allocated to over-compliant vessels equal to their positive compliance balance, expressed in tCO2e, and valid for two years after emission. Ships then will be able to use the surplus units in the following reporting periods, transfer to other vessels as a credit, or voluntarily cancel as a mitigation contribution. This could give rise to an entirely new ticket market or emissions trading scheme (ETS) common in many European markets for other transport fuel sectors. LNG vessels accounted for more than 2pc of the active global shipping fleet as of October last year, according to energy industry coalition SEA-LNG, but make up the majority of new-build alternative marine vessel orders over the next 10 years. By Madeleine Jenkins IMO GHG reduction targets Year Base Target Direct Compliance Target 2028 4% 17% 2029 6% 19% 2030 8% 21% 2031 12% 25% 2032 17% 30% 2033 21% 34% 2034 26% 39% 2035 30% 43% Source: IMO Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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