“Never Ever Ever Make Yourself An Unreliable Supplier” Featuring Fred Hutchison, LNG Allies

Today we had the pleasure of hosting Fred Hutchison, President and CEO of LNG Allies, for a comprehensive discussion on an important and timely topic, LNG. Fred founded LNG Allies in 2014 and is a leading spokesman for the US LNG export industry with over four decades of experience in government and public relations. LNG Allies is an independent, non-profit association focused on advancing the interests of the US LNG industry and promoting the benefits of LNG exports. We were thrilled to visit with Fred.

We covered a lot of territory in our conversation starting with background on the formation of LNG Allies, the significant shift in the US from being an importer to becoming the world’s largest exporter of LNG in a relatively short period, gratitude from European countries towards the US for supplying LNG in the post Ukraine invasion energy crunch, the ongoing debate about natural gas as a lower impact fuel and its role in the energy transition, the impact of recent geopolitical events and energy prices on energy security and industrial activity, and potential motivations and implications behind the Biden Administration’s pause on LNG approvals. We touch on the shift in resistance to long-term LNG contracts, opposition and lobbying against LNG exports, global trust in the US as a supplier and concerns about reliability with changing administrations, the potential for LNG growth in other countries, the impact of US policy decisions on energy supply, and concern with the lack of understanding among policymakers about energy issues. Fred shares his perspective on the diverse export market for LNG, emerging markets in future LNG demand, challenges faced by countries in accessing financing for LNG projects due to credit rating issues, and much more. We ended by asking Fred for his view on the state of journalism and public debate as a writer himself. It was a wide-ranging and in-depth conversation and we can’t thank Fred enough for sharing his time and thoughts with us.

In our discussion, you will hear we reference a few items. The IEEJ’s January 2024 report is linked here and the Wall Street Journal op-ed regarding the IEA is linked here. For additional LNG reading, the LNG Allies’ report on US LNG projects and contracts as of February 3rd is linked here and a recent letter to Congress on the LNG Moratorium is linked here.

Mike Bradley kicked us off by sharing key economic, equity market, commodity and energy sector thoughts. On the economic front, January CPI printed hotter than expected, pushing the 10-year yield bond up and calling into question the pace of future FED rate cuts. On the broader equity market front, even though the hotter than expected CPI pushed the DJIA down over 500 points, he stressed that market volatility remains historically low and investor sentiment remains bullish. On the commodity market front, WTI price surged to ~$78/bbl. (+$5/bbl. on the week) which is the upper end of its 3-month trading range. He noted several recent crosscurrents effecting crude oil markets and highlighted that U.S. natural gas prompt price plunged to ~$1.65/MMBtu (lowest price level since Covid in 2020 and prior to that 1999) and noted that the 12-month strip traded down to ~$2.50/MMBtu, which is below “most” U.S. natural gas E&Ps break-even price. On the traditional energy sector front, he highlighted this week’s $26 billion merger deal between Diamondback Energy and Endeavor Energy, which was well-received by equity investors. He wrapped up by noting that Shell PLC would be releasing their 2024 LNG Outlook report on Wednesday which should be topical for LNG market observers. Todd Scruggs flagged the ongoing debate about the potential shutdown of the Everett LNG import terminal in Massachusetts and made observations about the relationship between historical data on natural gas production growth, LNG exports, and market prices.

Thanks to you all for your support and friendship!