Natural gas price boom could last for years

Demand high, but push to renewables has led to less investing in drilling

WASHINGTON — Charif Souki is feeling pretty pleased with himself these days.

Eighteen months ago, the EXCEO of Cheniere Energy, now executive chairman of Houstonbased Tellurian LNG, had to lay off half his staff amid grim projections for global gas demand.

But with supply shortages now causing price spikes in Europe and Asia, Souki says he has Wall Street investors banging on his door and plans to begin construction on the Driftwood LNG project outside Lake Charles, La., by March — though no final decision has been made.

“A year ago, everyone is saying he’s never going to build anything,” Souki said in a recent interview, referring to critics on Wall Street. “You bring it to them now, and they’re salivating.”

For more than a decade, the price of natural gas was so cheap that in some parts of the world it made more financial sense to

burn the gas at the wellhead than to build pipelines to bring it to customers. But now the world is facing an extended period of supply shortages that stand to drive up natural gas prices for

years, experts say.

“Demand is outpacing supply,” said Michael Stoppard, chief strategist for global gas at consulting firm IHS Markit. “The current high price cannot be sustained for a long time, but there are underlying fundamentals that have turned around the market for the next few years.”

With the global economy rebounding from the COVID-19 pandemic, demand for energy in all forms is strong. But unlike crude oil, the natural gas supply chain cannot easily be adjusted to where it’s most needed. Transporting gas requires pipelines and specialized cooling plants to transform it into a liquid, projects that cost billions of dollars and take years to permit and build.

Not so long ago, the world was awash in natural gas from fields in Qatar, Australia and the United States. But with a push toward renewable energy, oil and gas companies steadily pulled back from developing new fields, even as gas demand increased with a growing global population requiring greater amounts of energy.

Between 2014 and 2019, capital spending by the global oil and

Bloomberg file photo A worker organizes canisters of cooking gas last month near a Petrobras refinery in Duque de Caxias, Brazil. With the global economy rebounding from the COVID-19 pandemic, demand for energy in all forms is strong.

New York Times file photo Insulated storage tanks for liquefied natural gas are shown at a Cheniere Energy plant near Corpus Christi last year.