The Potential Gas Committee (PGC) recently reported that U.S. natural gas supply has reached a record level of 3,978 trillion cubic feet, marking a 3.6% increase from the previous year. Shale gas accounts for the majority of the supply at 61%. However, despite the abundant natural gas resources, the availability of gas pipelines is becoming a limiting factor.
The Atlantic region, home to the Marcellus and Utica shale plays, holds the largest share of the estimated gas resources at 40%. However, without sufficient pipeline infrastructure to transport the gas from production zones to demand centers, the full potential of the gas supply cannot be realized.
Richard Meyer, the vice president of energy markets, analysis, and standards at the American Gas Association, emphasized the need for new infrastructure to connect production zones and demand centers. PGC President Kristin Carter also expressed concerns about the lack of pipelines, stating that there is only so much gas that can be brought to the market without additional infrastructure, leading to inactive wells.
Pipeline constraints have been a recurring issue, particularly in the Appalachian Basin, the largest gas-producing region in the U.S. Environmental groups have been successful in stopping or delaying pipeline projects, affecting gas production and export capabilities. As a result, the Permian Basin and Haynesville Shale have taken on a larger role in LNG exports.
Analysts at East Daley Capital Inc. project that U.S. LNG exports will double by 2030, but to achieve this, an additional 2-4 billion cubic feet per day (Bcf/d) of takeaway capacity is needed between 2026 and 2030. This is particularly important for the Haynesville region, assuming significant gas growth from the Permian and other associated gas plays. A decrease in oil prices could further increase the demand for gas from gassier basins.
Despite the limitations posed by pipeline constraints, the construction of new export terminals has contributed to the growth of U.S. LNG exports. The U.S. is now one of the top three LNG-exporting countries in the world. The Energy Information Administration (EIA) predicts further growth in LNG exports in 2024 with the completion of the Golden Pass and Plaquemines LNG projects.
The Golden Pass project in Texas, a joint venture between ExxonMobil Corp. and QatarGas, is expected to come online in 2024 with a total nominal capacity of 2.7 Bcf/d. The Plaquemines LNG Phase 1 project in Louisiana is also scheduled to start LNG production in August 2024, adding to the export capacity.
Current international natural gas market conditions, with higher prices in Europe and Asia compared to the U.S., are favorable for expanding U.S. LNG exports. The EIA estimates that U.S. LNG exports will increase from 12.0 Bcf/d in the current year to 13.3 Bcf/d in 2024.
Overall, while the U.S. has abundant natural gas resources, the lack of sufficient pipeline infrastructure remains a barrier to fully realizing the potential of the gas supply. Additional investments and developments in pipeline infrastructure are crucial to support increased production and export capabilities.
Sources:
– Potential Gas Committee
– American Gas Association
– East Daley Capital Inc.
– Energy Information Administration (EIA)