Second wave of US LNG investments to sustain long-term global supply

BARCELONA, Spain — The global energy sector is forecast to be wellsupplied with gas until year 2040, with the second wave of United States investments fueling about 50 percent of gas production rise, global consulting firm Wood Mackenzie has noted at the 2018 GasTech conference.

On a per industry basis, the marine sector is seen soaking up significant fraction of demand growth mainly due to the stricter marine fuel regulations by year 2020 to be enforced by the International Maritime Organization (IMO).

As assessed, the ship owners will reach that phase and decide whether they want to continue using high sulfur fuel oil, in conjunction with scrubbers or exhaust gas clearing systems; or switch to low sulfur fuel options, including virtually sulfur-free liquefied natural gas.

For export markets, Asian countries – which may include the Philippines – are still seen the key markets cornering demand, with many of the economies in the region now on their decision point to gas shift in their energy mix.

“US producers have witnessed LNG exports rise to current levels of over 3.0 billion cfd (cubic feet per day). They are expected to approach 10 billion cfd in 2020,” Wood Mackenzie Director for Americas Gas Research Kristy Kramer has stated.

She added “a second wave of LNG projects in the US is set to bring more than 10 million tons per annum to the market under binding sales and purchase agreements (SPAs).”

Kramer emphasized “the increase in SPAs is remarkable,” noting that in the first wave of liquefied natural gas projects in late 2017, just 2.0 mmtpa had been locked in.

She indicated that “the US market will increase by more than 30 billion cfd between 2012, when the first US project took FID (final investment decision); and 2022 when those projects will be online.”

Around that time also, Kramer explained that 36 percent of US gas will be consumed in or exported, and this could also trigger increased competition in pipeline capacity.

The consulting firm nevertheless qualified that while the world may be assured of ample supply, it will take a lot of modeling and structuring how market buyers could get their hands into the supply being injected into market.

“Buyers will need to have comfort in the strategy for getting gas into liquefaction, and lenders will want to be confident in a project’s overall commercial offering,” Kramer said.