Intelligence brief: US LNG exports to push global price convergence; California gas demand rising, with a catch
Gas industry news you need to know
US LNG exports to push global price convergence
Liquefied natural gas exports from the United States will bridge the gap between prices in North America and other regions, the World Energy Council and Accenture Strategy have predicted.
“Specifically, US LNG is set to contribute to interconnectedness across regional markets through its contribution to gas-on-gas competition, increased liquidity, and increased consumer bargaining power globally,” the partners said. They made the forecast as part of a broader report in which they predicted that the growth of unconventional gas, namely from shale and tight oil deposits, would make gas more affordable to consumers and reduce global supply concerns.
Referring to five US LNG export projects that are expected to add 62.7 million tons per year of new export capacity by 2019, the report said the United States will account for almost one-fifth of global liquefaction capacity and become the third-largest LNG export-capacity holder in the world, after Australia (86.5 Mt/y) and Qatar (77 Mt/y).
The report also noted that although E&P operators made significant cuts in 2015 to capital expenditure, many of those with US land assets reshuffled their portfolios toward shale gas. With the large inventory of uncompleted wells and reduced service prices, and having already sunk the drilling costs in 2015, companies will be able to bring production on at reduced costs in 2016, it predicted.
California natural-gas demand rising, but not for power
The California Energy Commission expects natural-gas demand to be 9.3% higher in 2024 than in 2013, although it foresees a decline in gas for power generation.
In its 2015 Integrated Energy Policy Report, the CEC attributed the higher growth rates to an increase in natural-gas demand in the residential, commercial and transportation sectors. The decline in gas for power generation would be “driven by increases in the share of electricity generated from renewable resources that reduce the need for power from fossil-fueled sources”, it said.
Natural-gas burn for power generation is expected to decline in California (Source: California Energy Commission)
As the use of natural gas for power generation increases nationwide and the need for quick-ramping gas-fired generation to integrate intermittent renewable resources has grown, natural gas and the electricity industry have become increasingly independent, the report noted.
To ensure continuity of both wholesale and retail supply as wholesale reliance on natural gas increases, there is need for better coordination between pipeline delivery of natural gas and electric system reliability needs, particularly in the San Diego region, it said.
The report flagged one other challenge for natural gas in California: the four consecutive years of drought, which “raises questions about the reliability of water supply for natural gas, solar thermal, and geothermal power plants that use water in electricity generation”.
Penn taskforce recommends recruiting veterans for midstream work
Pennsylvania’s Pipeline Infrastructure Task Force has made 184 suggestions on how to achieve responsible development of natural gas pipelines in its final report to Governor Tom Wolf.
The taskforce, which was made up state government officials and external stakeholders including representatives from the pipeline industry, conventional and unconventional oil and gas producers, end users, and local government, voted on the top 12 suggestions.
The top 12 suggestions were:
• Establish early coordination with local landowners and lessors
• Educate landowners on pipeline development issues
• Train emergency responders
• Enhance emergency response training for responder agencies
• Minimize impacts of stream crossings
• Use best available combination of technologies to protect exceptional-value and high-quality waters
• Ensure adequate agency staffing for reviewing pipeline infrastructure projects
• Implement electronic permit submissions
• Expand the PA1Call phone line for excavations for all classes of pipelines
• Identify barriers to sharing rights-of-ways
• Attract military veterans to the energy workforce
• Enhance science, technology, engineering, and math (STEM) education
On the second-last point, the report noted that Pennsylvania has one of the largest veteran populations in the country, and that they constitute a highly-skilled population whose members are often used to working in the harsh outdoor conditions that E&P and midstream work can require. The report also noted that a pilot program had been created in the south-west of the state to help veterans match their skills and interests directly to in-demand jobs and employers.