(Adds companies building U.S. LNG terminals and total Henry Hub
By Scott DiSavino
March 22 With the United States about to become
a net exporter of natural gas for the first time in 60 years,
Intercontinental Exchange Inc said on Wednesday it would
begin trading the first-ever U.S. liquefied natural gas futures
contract in May.
ICE said the contracts would be cash-settled against the
Platts LNG Gulf Coast Marker price assessment and use
Platts-derived U.S. GCM LNG forward curves for daily settlement
purposes. The curves will have an initial term of 48 months.
"Domestic and international market participants now have a
risk-management solution that lays the foundation for a more
effective means of hedging their spot and forward exposure,"
J.C. Kneale, ICE's vice president, North American power and
natural gas markets, said in a statement.
U.S. gas producers, plagued by low domestic prices in recent
years, are eager to sell into the international marketplace
through LNG. Growing LNG exports are propelling the United
States' transition to a net exporter of natural gas, which is
expected to happen later this year or in 2018.
The last time the country was a net exporter of gas on an
annual basis was in 1957. It started exporting gas from the
lower 48 states in February 2016, when the first vessel left
Cheniere Energy Inc's Sabine Pass export terminal in
Five other U.S. LNG export facilities are currently under
construction by units of Cheniere, Kinder Morgan Inc,
Sempra Energy, Dominion Resources Inc and Freeport
LNG. The companies expect them to enter service by the end of
With growth in LNG export capacity, the United States will
become the third-biggest exporter of LNG by the end of 2020,
according to S&P Global Platts, which provides the price
assessment for the ICE contract.
"We believe the U.S. Gulf Coast is poised to become a key
anchor for LNG prices,” said Shelley Kerr, S&P Global Platts'
global director of LNG.
She said growth in Asia-based LNG swaps has already been
strong, and now "counterparties are demanding that the new
flexible supply from the U.S. is underpinned by both price
transparency and the means to hedge."
The benchmark natural gas contract in the United States is
the Henry Hub contract traded on the CME Group Inc's
New York Mercantile Exchange, which competes with ICE.
ICE also has contracts tied to the Henry Hub.
The average volume in Henry Hub futures on the NYMEX has
averaged around 400,000 contracts per day over the past 200 days
NG-TOT, according to Reuters data.
(Reporting by Scott DiSavino; Editing by David Gregorio and
Lisa Von Ahn)