A vessel docked at a dock on the Louisiana coast is claiming its LNG cargo. Ice forms on pipelines when refrigerated fuel extracted from fields as far as Texas or Pennsylvania is sent to the insulated cargo holds of tankers for shipment overseas.

Cheniere Energy’s Sabine Pass export terminal is one of seven export terminals operating in the United States, all of which are working at full capacity to meet the demands of an energy-hungry global market.

Europe’s goal of reducing its reliance on Russian gas in response to Moscow’s war in Ukraine should be a bonanza for U.S. LNG exporters, the world’s largest gas producer. Investors in these specialty companies are bullish, which is reflected in Cheniere’s recent all-time high.

But the outlook for more than a dozen new U.S. liquefaction projects remains highly uncertain as construction costs rise, U.S. natural gas prices soar and climate policymakers seek a long-term move away from fossil fuels and their associated emissions. Even the most advanced projects take years to provide the world with additional supplies.

U.S. begins transporting LNG from shale gas six years agoas new supply released by fracking prompted Chenier to build an export infrastructure in Sabine Pass, which was originally designed to handle imports.

Total U.S. LNG capacity currently stands at 120 billion cubic meters per year. Three more plants will be commissioned by 2025, bringing 70 billion cubic meters of new capacity. Another 206 billion cubic meters of plant has been approved by federal regulators but is awaiting final approval from its sponsors.

European Commission President Ursula von der Leyen announced last month a deal with U.S. President Joe Biden under which the EU will guarantee long-term demand for an additional 50 billion cubic meters of LNG a year.These quantities will offset some 155 billion cubic meters of natural gas The EU imported from Russia last year.

“I think everyone has felt a huge lift in the last three to four weeks,” said Dan Brouillette, a former U.S. energy secretary in the Trump administration who is now president of Sempra Infrastructure, which owns Cameron, Louisiana. Majority stake in LNG plant. There has been a “dramatic shift” in European attitudes to U.S. fossil fuels, he said.

U.S. LNG executives now believe another wave of new construction could be on the horizon.

“The future of U.S. LNG is nowhere in sight,” said Michael Smith, chief executive of Freeport LNG, which operates an export terminal south of Houston. “Europe recognises they need LNG rather than believing they can get away with it [energy crisis] Only renewable energy. . . it’s a big positive step. ”

Jack Fusco, CEO of Houston-based Cheniere, said the European decision Include some natural gas in its green classification Its decision to abandon Russian energy was a “positive” sign of a more “realistic view” of the role of LNG in energy security and the transition to clean energy.

No one expects all the capacity proposed by the US to be built. LNG plants are expensive and take years to pay off. Developers typically must enter into purchase agreements with customers that last twenty years or more, covering at least 80% of capacity, before deciding to proceed.

Given other efforts to diversify away from carbon-based energy sources, analysts doubt the European Union’s guarantees or a surge in global LNG prices will eventually spur as much demand as project developers hope. Brussels’ “RePowerEU” energy policy statement released last month aims to break the reliance on Russian energy, but also talks about a “faster reduction in the use of fossil fuels” in general.

Advocates of U.S. LNG say their fuel is a less carbon-intensive source of electricity than coal, meaning it could help some countries cut emissions quickly. However, methane leaks from natural gas infrastructure and the carbon intensity of export plants throughout their life cycle could undermine this claim.

Project developers say they can add carbon capture technology to reduce emissions. Freeport has installed electric drives to power its gas liquefaction process. But analysts said long-term demand from European utilities remained uncertain.

“There’s a big customer out there that wants LNG, but you’re not really sure how long that will last,” Nikos Tsafos, an LNG expert at the Center for Strategic and International Studies in Washington, said of Europe. “If anything, they’re trying to be very Get out of the gas business completely and quickly.”

The developer acknowledges that supply chain disruptions and a tight labor market will also affect new capacity. The latest terminal to open, Venture Global’s Calcasieu Pass in Louisiana, came online in just 29 months, but other new projects have been slower. Costs are rising as inflation sweeps the U.S. economy.

“We’re primarily a steel project,” Smith said. “And steel [prices] It has doubled in the past two years. ”

Projects that could cost $500 million per million tons of LNG capacity could now be approaching $1 billion, Smith suggested.

Gas prices in the U.S. are still cheap compared to Europe or Asia, but have recently surged to their highest level since 2008, exceeding 7 million British thermal units. Large inflows into LNG export terminals are one of the forces driving this growth.

Clark Williams-Derry, an analyst at the Institute for Energy Economics and Financial Analysis, said the scarcity of LNG supplies meant “a group of wealthy advanced economies are competing for the same small pool of LNG”. Poorer Asian countries, which the global LNG industry has been relying on to drive growth, may reconsider their LNG import plans, he said.

Most of the U.S. LNG that can be shipped to Europe is already sailing in Europe, accounting for about 70% of exports this year. The U.S. cannot immediately make up for the sudden interruption in Russian supplies, especially as the European Union also tries to replenish its stockpiles for next winter.

“I wish I had better news for Europe, but it will take .

Additional reporting by Amanda Chu in Washington