Natural gas report: producers scurry to satisfy demand

By Staff | November 13, 2018

The natural gas production and logistics industry is set to surge because of renewable power generation demand across the globe. The growth will also happen, despite recent trade disputes, according to a new report from Black & Veatch that outlines the reasons why natural gas will continue to see increased usage and investment even with prices-per-Btu still low.

“Smart investors understand that while trade disputes and geopolitical developments may change the playbook in the near term, natural gas is a highly viable play over the long term, and an important part of a balanced energy portfolio,” said Hoe Wai Cheong, president of Black & Veatch’s oil and gas business.

The report, available for free download, explained several key issues occurring in the natural gas sector.

Opportunities in LNG: LNG production is rising as countries, eager for alternatives to coal-fired power, set ambitious clean energy targets. With heavy investments in planned LNG export facilities in the U.S., more than 80 percent of respondents to Black & Veatch’s survey said U.S. emergence as a major LNG supplier will reshape the global market over the next half decade.

Capitalizing on FLNG: Early adopters of floating LNG sought to move supply to end users quickly, efficiently and economically; the 2018 successes of Golar LNG’s Hilli Episeyo and Shell’s Prelude FLNG vessels mark major milestones. FLNG sites offer an attractive, lower-risk opportunity for investors because they offer quicker speed to market, aren’t fixed to one location and have greater operational flexibility.

Renewables and Natural Gas: As renewable technology prices drop and capabilities expand, power from solar, wind and other distributed energy technologies challenge natural gas in evolving power portfolios. The report explores the scenario in California, which recently passed policies requiring renewables to account for 60 percent of power generation by 2026, and 100 percent by 2045. Although the future looks promising, the scalability and financial investments required for large-scale deployments aren’t trivial.

Trade Dispute: The U.S.-China trade discord is altering the conversation around LNG shipping. The tariff on U.S.-produced LNG will negatively impact the cost of transporting natural gas to Chinese customers, potentially changing the fortunes of U.S. producers counting on rising Asian demand.

Pipeline Capacity: Rampant natural gas production in the hotbed Appalachian and Permian basins is raising concern that pipeline capacity can't keep up, even as the U.S. natural gas industry prepares to enter one of its strongest growth periods.