US LNG export outlook stunted by markets; Pipelines respond to power generators

A selection of news from the last month.

New study questions the viability of LNG export proposals
Most of the proposed US liquefied natural gas (LNG) export projects are unlikely to be built amid growing competition from foreign players, which will flood the market with natural gas as demand begins to slow, according to a new study by Brookings Institution.

The study says the US LNG projects already under construction will cross the finish line, but the other proposed projects are “increasingly unlikely” to go ahead due to global competition, financing difficulties, high upfront costs and other uncertainties, particularly over the amount of US natural gas that will be competitive in global markets.

According to Brookings Institution, the demand for natural gas, especially in Asia, in the coming years will not rise as rapidly as earlier forecasts suggested. As more supplies come on stream, the market is expected to become oversupplied.

PJM, pipeline operators to improve gas-electric coordination
PJM Interconnection and nine interstate natural gas pipelines have agreed to share more information about the supply of and demand for natural gas for power generation to improve operational planning and prepare for the growing interdependence of the electric and gas sectors, PJM said in a statement on July 30.

PJM said it had agreed a memorandum of understanding with the pipeline operators to provide better information on the needs of gas-fired generators and to ensure adequate pipeline capacity as more generators switch to natural gas supplies.

The pipeline operators, which serve power generators that often do not hold primary firm contracts for gas transport, have confirmed they are willing to “firm up” their services where necessary and to serve additional generators as new plants are built or existing facilities are converted to natural gas.

Study slams New England winter reliability pipeline proposal 
The proposed electric ratepayer funding of additional pipeline capacity in New England is costly and risky for both ratepayers and the energy market in the region, according to a new report by Energyzt Advisors conducted after the record-low temperatures of winter 2014-2015.

The report, commissioned by GDF Suez Energy North America, analyzed energy market conditions that occurred in New England and compared the costs, benefits and market impacts of alternative proposals to address winter reliability. The report found that the existing energy infrastructure in New England is more than adequate to handle the region’s energy needs and that the real issue is lack of commercial contracts to access existing energy infrastructure.

The report suggests that LNG and dual-fuel capability could be less costly alternatives to a subsidized pipeline. Moreover, pipeline expansions already underway and ISO-NE’s market-based approach with its “Pay-for-Performance” in the Forward Capacity Market could ensure winter reliability for at least the next decade under ISO-New England 2015 projections of load growth, generation additions and retirements.

ONEOK to expand WesTex pipeline
ONEOK Partners has announced it plans to invest between $70 million and $100 million to increase the throughput capacity of its WesTex Transmission interstate natural gas pipeline by 260 million cubic feet per day by Q1 2017 for a total of 500 million cubic feet per day.

According to ONEOK, the expansion project is complementary to the company’s recently announced Roadrunner Gas Transmission pipeline project, which will transport natural gas from the Permian Basin in West Texas to Mexico.

Filling stations set to rise

Natural gas refuelling stations are expected to grow from 23,001 in 2015 to 38,887 in 2025 globally, according to a new study by Navigant Research.

The density of global refueling infrastructure varies widely and often depends on government incentive programs, according to the study.

Meanwhile, a recent report by Transparency Market Research estimates that the global natural gas refueling infrastructure market will reach 29,688 units by 2022 at a CAGR of 4.80% from 2014 to 2022.

Net Class 5-8 vehicle orders decline in June
Orders for Class 5-8 natural gas-powered vehicles in North America dropped 14% in June, marking the third straight month of declines, but will likely benefit from seasonal adjustments in the next few months, according to preliminary findings from ACT Research.

At 19,900 units, NA Class 8 orders fell 25% on a year ago to their lowest monthly net order volume since September 2013.
Medium-duty orders also saw a downturn to 14,700 units, significantly below the 19,000 units per month average the industry has experienced since last July.

According to ACT Research, while declining diesel prices are making natural gas vehicles less lucrative, the order drop-off could also be due to larger backlogs.

The company projects continued growth in the adoption of natural gas-based heavy-duty vehicles in the US but at a smaller rate than earlier forecasts.