North America's LNG Ambitions: Bottlenecks, Competing Demands, and the Road to Value

North America's natural gas sector is at a crossroads. With global demand for liquefied natural gas (LNG) surging—and the U.S. poised to become the world's largest exporter by 2030—the continent's ability to capitalize on this opportunity hinges on overcoming a labyrinth of infrastructure bottlenecks, regulatory hurdles, and competing domestic gas demands. Nowhere is this tension more acute than in projects such as the Prudhoe Bay II gas processing plant and the Golden Pass LNG terminal, whose delays and uncertainties underscore the fragility of supply chains in an era of geopolitical and climatic volatility. For investors, the path to returns lies in parsing these risks while identifying firms positioned to benefit from the structural LNG boom.

Pipeline Constraints: A Brake on Ambition

The Golden Pass LNG terminal in Texas epitomizes the challenges of scaling LNG infrastructure. Despite its status as a $10 billion project to add 22 million tonnes per annum (MTPA) of LNG capacity, Golden Pass has faced repeated delays. A critical constraint is its 1.1-mile supply lateral pipeline, which interconnects with interstate pipelines. Construction stalled in late 2024 after the bankruptcy of contractor Zachry Holdings, with completion now delayed until late 2025 or early 2026. While Chiyoda's takeover has revived progress, the terminal's Train 1—83% complete—is now years behind schedule.

Meanwhile, the Alaska Gasline Development Corp's Prudhoe Bay II—a 3.9 billion cubic feet per day (bcfd) gas processing plant—is not slated to begin operations until 2030. This timeline underscores the industry's struggle to align project timelines with market demand. The result? A capacity gap: by 2025, North America's LNG export growth is constrained to just ~7 bcfd, far below the ~26 bcfd targeted by 2030.

Midstream firms like Cheniere Energy, which operates the Sabine Pass and Corpus Christi terminals, have weathered these challenges better than others. Their shares, however, remain vulnerable to delays and oversupply risks, which could materialize if global LNG demand falters post-2026.

Regulatory and Trade Headwinds: A Delicate Balancing Act

Regulatory bottlenecks are compounding physical infrastructure constraints. The Federal Energy Regulatory Commission (FERC) faces a backlog of environmental assessments, including Golden Pass's EA deadline of September 2025. Meanwhile, the U.S. imposed a 10% tariff on Canadian gas imports in March 2025, reducing flows by 16% and tightening regional supplies. Such policies risk exacerbating price volatility: Henry Hub futures have risen to $3.64/MMBtu as of June 2025, nearing the $3.50/MMBtu threshold producers cite as critical for sustaining drilling activity.

The geopolitical dimension adds further complexity. U.S. LNG exports to Europe—a response to Russia's invasion of Ukraine—face competition from Middle Eastern producers, who can undercut prices due to lower production costs. This dynamic could trigger curtailments in North America, especially if global LNG supply exceeds demand by 9 bcfd by 2030, as Goldman Sachs predicts.

Competing Domestic Demand: The AI Data Center Dilemma

While LNG exports dominate headlines, domestic gas demand is also surging, particularly from AI-driven data centers. These facilities, projected to consume 2–4 bcfd by 2030, are competing directly with export terminals for supply. Data centers are clustering near gas-rich regions like Appalachia and the Permian Basin to minimize transport costs—a strategy that may strain local pipeline capacity and divert gas away from export terminals.

The price implications are stark. Producers require $2.50–3.50/MMBtu to incentivize drilling, yet Appalachian basins faced $10+/MMBtu spikes in February 2025 due to pipeline constraints. Such volatility creates a “damned if you do, damned if you don't” scenario: low prices stifle production, while high prices risk deterring industrial consumers.

Investing in the LNG Supply Chain: Risks and Opportunities

The path to profit requires a nuanced approach:

1. Focus on Midstream Infrastructure with Clear Timelines:
   Projects like Golden Pass—despite delays—remain critical to U.S. LNG dominance. Investors should prioritize firms with secured offtake agreements (e.g., QatarEnergy's stake in Golden Pass) and manageable debt.

2. Monitor Storage and Pipeline Developments:
   The Texas Express pipeline and Louisiana's Trunkline LNG expansions, which aim to address takeaway constraints, are critical to unlocking Permian and Haynesville Basin gas for export.

3. Avoid Overexposure to Pure-Play Exporters:
   Firms without diversified revenue streams, such as niche LNG terminal operators, face existential risks if global demand softens or curtailments materialize.

4. Consider Gas Producers with Low-Breakeven Costs:
   Operators in the Haynesville Basin (e.g., Antero Resources) or the Marcellus/Utica (e.g., EQT Corp) can thrive at $2.40–2.50/MMBtu breakevens, offering resilience against price fluctuations.

Conclusion: A Narrow Path to Value

North America's LNG export ambitions are not doomed, but they are far from assured. Investors must navigate a minefield of delays, competing demands, and regulatory uncertainty. The golden rule is to favor firms with diversified assets (midstream and upstream), solid project execution track records, and exposure to basins with low breakeven costs.

For now, the market's tight supply-demand balance—driven by low storage levels and rising LNG demand—supports gas prices near $3.50/MMBtu, a level that rewards producers but tests exporters. The next 12–18 months will be pivotal: if Golden Pass and Prudhoe Bay II meet revised timelines, and data center demand is managed without siphoning gas supplies, North America could emerge as the LNG superpower it aspires to be. Until then, the road to returns remains fraught—but navigable for the cautious.

Investment Takeaway: Overweight midstream infrastructure firms with contracted LNG projects (e.g., Cheniere Energy) and gas producers in low-cost basins (e.g., Antero Resources). Underweight pure-play exporters and high-leverage operators without diversified revenue streams.