SAN ANTONIO—A new world is unfolding. That’s what Tom Petrie, chairman of Petrie Partners, said of today’s natural gas market, and it all starts with supply.
Eight years ago, the U.S. was looking at five main sources of gas— Marcellus, Haynesville, Woodford, Fayetteville and Barnett. However, proven results in the Permian, Eagle Ford and Utica shale plays have since boosted natural gas supplies in the U.S., Petrie said at Hart Energy’s DUG Eagle Ford conference and exhibition.
The transformation positions the U.S. to be one of the top three suppliers of methane to markets around the world, Petrie added. But “That’s all subject to being able to make sure that we can bring that gas to the relevant markets,” he said.
New infrastructure will be required to accommodate this supply.
“There will be various differentials for deliveries of gas, but with the infrastructure buildout that’s required, something on the order of 170 billion for another 13 billion of incremental export capacity is really what we are talking about,” Petrie said. “And that is a result of a 20 billion cubic foot a day number, but 7 billion of that’s already underway.”
With the current infrastructure in place and the known infrastructure projects that are to be completed, the U.S. will be operating at about a 110% LNG capacity utilization by 2021, according to Petrie.
“That’s not a long-term sustainable proposition,” he said, adding more buildout will be needed between 2021 and 2023.
New projects will need to come online to reach a sustainable level of infrastructure utilization.
“We are talking about 49 mtpa [million tonnes per annum] under construction and that 101 of incremental,” Petrie said. “And that’s the incremental that’s required to get that 13 million cubic feet a day.”
Petrie also said the pattern of LNG imports in the Pacific and Atlantic Basin will be different. There will be demand growth for LNG, he said, in the Pacific Basin, including Asia, China, India and the Middle East, while the Atlantic Basin will see gas-on-gas competition.
“That’s why the expansion of the Panama Canal was really critical to how the U.S. can compete in these markets,” he said.
Petrie added that the U.S.’ ability to compete in Asia—particularly China, India, Japan and South Korea—is going to be such that it is going to have a meaningful impact on its overall market share.
“And that’s why as we move into the next decade, it’s becoming very, very clear that the U.S. will be one of the top three suppliers of LNG globally alongside the sources coming out of the Middle East and the North West Shelf of Australia and various other Asian sources that are being developed,” he said.
LNG exports will evolve from a rigid point-to-point delivery model to one with a multiplicity of markets embracing gas-on-gas competition, he continued.
“That’s why… expected growth of the market from the baseline of 2015 out to 2030 where the compound annual growth in the LNG is just under 5%,” he said. “That’s an enormous number to see the requirement for the supply, and that’s why meeting those demands of 170 billion and actually something beyond that for the 2030 picture will be critical.”
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