Impact of White House Pause on LNG Export Licenses: Exempted Projects and Their Implications
On January 26th, the White House paused approvals for new Liquefied Natural Gas (LNG) export licenses to non-free trade agreement (non-FTA) countries. As we highlighted in our recent analysis of Chesapeake’s merger with Southwestern, there are 14 projects representing ~26 Bcf/d of approved LNG projects that are not yet operational or under construction. Of these 14, three projects representing ~8 Bcf/d have already been awarded a non-FTA license. As a result, Driftwood (Tellurian), Texas LNG (Glenfarne Group), and Rio Grande LNG (Rio Grande LNG, LLC) are not subject to the pause.
Figure 1. Haynesville Horizontal Production by Operator
Assessing the Future of Haynesville Investment Amidst LNG Capacity Expansion
Ultimately, will this trend make or break the Haynesville investment thesis? Probably not. There is ~32.4 Bcf/d of potential capacity that could be online by the end of this decade. Over 15 Bcf/d of that is expected to be in Louisiana, and most of Louisiana’s projected capacity is already operating or under construction. Instead, the focus should center on whether the projected supply can fill that capacity. On the Louisiana side of Haynesville, the current rig count is ~28 rigs. In a scenario analysis where the rig count stays flat, assuming moderate gains in drilling speeds and accounting for year-on-year per foot productivity declines (~9%), Haynesville supply will only have grown ~600 MMcf/d by Q4/28. Put another way, LNG capacity will have increased ~7 Bcf/d more than supply.
Novi Labs three key takeaways:
- To hit a 7 Bcf/d growth target, the Haynesville rig count must increase, especially on the Louisiana side of the border. By our estimate, the rig count in Louisiana Haynesville needs to be at all-time highs (50+ rigs) by Q1/26. If productivity declines accelerate, this will need to take place sooner.
- Pipelines will likely need to be built across the Louisiana and Texas border. Hitting the growth targets from Haynesville alone is possible, but the quality and quantity of remaining Haynesville inventory in 2030 would be severely degraded. By tying the Louisiana portion of the LNG complex into the rapidly growing supply from both the Permian (+2.0 Bcf/y) and Eagle Ford (+0.7 Bcf/y), Haynesville inventory will last longer.
- Prices need to increase. With Henry Hub hovering below $2.50/Mcf and Haynesville breakevens ranging from the high two’s to the low four dollars per Mcf range, the price signals needed to ramp supply for the coming LNG wave are absent. One possible outcome is that the prices needed to fill LNG won’t emerge until the capacity does, in which case a supply deficit in 2028 is inevitable. An alternative thesis is that Louisiana gas hubs will diverge from Henry Hub and develop a regional premium.
Figure 2. Louisiana LNG Capacity versus Horizontal Supply
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Key Takeaways
- On January 26, the White House paused approvals for new LNG export licenses to non-FTA countries.
- Three approved LNG projects totaling ~8 Bcf/d already hold non-FTA licenses and are exempt from the pause.
- Driftwood (Tellurian), Texas LNG (Glenfarne Group), and Rio Grande LNG (Rio Grande LNG, LLC) are not subject to the White House pause.
- Potential LNG export capacity totals ~32.4 Bcf/d by decade-end, with over 15 Bcf/d expected in Louisiana.
- With Louisiana-side Haynesville rig count near ~28, supply grows ~600 MMcf/d by Q4/28 under flat rigs and ~9% YoY per-foot productivity declines.
- Under that scenario, LNG capacity increases ~7 Bcf/d more than Haynesville supply by 2028.
- Meeting a 7 Bcf/d Haynesville growth target requires Louisiana Haynesville rig count at 50+ rigs by Q1/26.
- Henry Hub below $2.50/Mcf remains under Haynesville breakevens from the high $2s to low $4s per Mcf.
