Natural gas still fuels hope in energy industry
The energy sector remains in the tank with much of the focus on low oil prices, but one segment that’s holding up better is the natural gas pipeline industry.
Anew Moody’s Investors Service report singles out the owners of gas pipelines as safer, if not sexy, bets. Even though gas prices remain very cheap, the demand for natural gas is strong and the pipeline operators rely on fixed, long-term contracts to funnel as much volume as possible. They’re less impacted by day-to-day pricing.
“Roughly 80 percent to 90 percent of the pipeline capacity is contracted through such firm agreements, shielding these companies from the direct impact of volatility in the commodity markets,” the Moody’s report stated.
Still, many pipeline operators have suffered on Wall Street because “the interstate natural gas pipeline sub-segment appears to have gotten swept up in the downturn,” the report added.
Natural gas pipeline owners are showing signs of growth though. TransCanada just bought the Houston-based Columbia Pipeline Group for more than $10 billion to beef up its U.S. shale gas presence, and the Williams Cos. is expanding its Transco pipe system that runs from Texas to New York. Ramping up exports
Houston-based Cheniere Energy is working to export much more of the glut of natural gas in liquefied form.
Cheniere, which became the first company to export liquefied natural gas from the U.S. in February, said it started producing LNG on July 28 from its second unit at its Sabine Pass Terminal in Louisiana. The LNG unit, called a train, is expected to be fully up and running at the end of September.
The third and fourth units will come online in the summer of 2017, said new Cheniere CEO Jack Fusco.
“We are firing on all cylinders and beginning to see the impact our company is having on the global energy marketplace,” Fusco said.
Although Cheniere was the first U.S. exporter, other LNG export projects have come online in Australia and elsewhere, creating a temporary global oversupply.
Anatol Feygin, Cheinere’s senior vice president for strategy, described a current “loose” market that will improve in three years or so. Global LNG demand will double by 2030, he said.
One anticipated reason is the world switching away from dirtier coal-fired electricity generation and relying much more on natural gas for environmental purposes. Gore to attend conference
Many environmentalists argue natural gas still isn’t clean enough, especially because of concerns over methane leaking into the atmosphere.
Those concerns and others are bringing environmental activist and former Vice President Al Gore to Houston on Tuesday.
Gore is participating in the Climate Reality Project’s three-day leadership corps training from Tuesday through Thursday.
The training will focus on climate issues specific to Texas, the political and social conversations around renewable energy deployment, and the role of fossil fuel companies in climate denial efforts.