CAMERON LOUISIANA – JUNE 7: A large liquified natural gas transport ship sits docked in the … [+]
Shares of liquefied natural gas (LNG) exporter Venture Global, Inc. began trading on the New York Stock Exchange Friday following the launch of an initial public offering valued at $1.75 billion. Thursday’s IPO included the offering of 70 million shares of Class A common stock at an initial price of $25 per share.
With a total initial market cap of $65 billion, Venture Global (VG) becomes the largest energy IPO by valuation in U.S. history and just the sixth US company to debut with a market cap of $60 billion or more. The IPO was launched just three days after Donald Trump was inaugurated as the 47th President of the United States, following a campaign in which he promised to fully unleash America’s oil and natural gas industry.
TOPSHOT – US President Donald Trump signs executive orders in the Oval Office of the White House in … [+]
Trump Reverses Biden’s LNG Permitting Pause
As one of his first actions, Trump signed an executive order reversing Joe Biden’s pause in LNG permitting, returning this American growth industry to normal order following a year of uncertainty. This return to normalcy will enable the U.S. to fully meet commitments to allies in Europe, Asia and other global markets to deliver natural gas for their own energy and economic needs.
Trump has declared an energy emergency and will use all necessary resources to build critical infrastructure. His administration is also moving to reverse much of Biden’s climate agenda, streamline permitting for energy projects, and reviewing for rescission all regulations that impose undue burdens on energy production and use, including mining and processing of non-fuel minerals.
VG currently has five separate LNG export projects in various stages of development, all located in Southern Louisiana with access to the Gulf of America. Once completed, the combined capacity of the projects will total to 104.4 metric tons of LNG per year. In a recent study, S&P Global projects the U.S. LNG industry will double its contribution to the domestic economy by 2040. It also projects global LNG demand to continue rising through 2040, with Asian markets driving longer-term demand.
The LNG industry has already brought significant economic benefits to communities, especially along the Gulf Coast where most of the facilities are located. According to a recent National Association of Manufacturers report, U.S. LNG supported the creation of over 200,000 jobs last year alone. S&P Global estimates that the industry has contributed an average of $408 billion in economic impact each year since exports began in 2016.
Shifting LNG Market Dynamics
In the early years, most U.S. LNG cargoes were bound for Asian markets, but that all changed quickly in 2022 following Russia’s invasion of Ukraine in late February. The destruction of Russia’s Nord Stream I and II natural gas pipelines combined with sanctions imposed by the U.S., NATO and the E.U. created a gas supply emergency across the European continent, and American LNG exporters leapt to fill much of that new demand.
European demand has declined slightly since 2022, but a cold winter could shift that trend. Biden’s permitting pause created a good deal of uncertainty among customers in Europe and elsewhere related to America’s reliability as a trading partner. With Trump moving to restore normal order in the industry, such concerns should ease.
In its study, S&P Global projects global demand for natural gas to continue a steady increase through 2040, and for U.S. LNG exports to more than double by 2030. Should all of its 5 projects ultimately move into full operation, VG would be a major contributor to that growth.
Importantly, each of VG’s five export facilities will be accompanied by carbon capture and storage projects designed to significantly reduce emissions into the atmosphere. Additionally, the company employs electrically-driven liquefaction technology powered by highly combined cycle gas turbines. The low-emissions profile should make the product attractive to customers in countries looking to use the imports to displace coal power plants.
The Bottom Line
President Trump is fond of summing up his plans for energy in his second presidency by using the phrase, “Drill baby, drill!” In reality, that has become a euphemism for his plans to expand the production and use of America’s vast oil and natural gas resources in all their forms and uses. Certainly, growth of the LNG export industry is a central part of those plans.
The timing of VG’s IPO comes at an auspicious time, during the first week of the new presidency. Its debut will serve as a key test of investors’ appetite for LNG and other fossil fuel energy ventures in the new administration.
