Released August 21, 2017 | SUGAR LAND
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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--The U.S. will become one of the world's top three exporters of liquefied natural gas (LNG) by 2023, which is expected to lead to a surge in gas production from the Marcellus, Utica, Haynesville and other shale formations, veteran energy analyst Tom Petrie, chairman of Petrie Partners LLC (Denver, Colorado), told a standing-room-only crowd August 15 at ENERCOM'S The Oil & Gas Conference in Denver.
Demand for LNG is expected to grow most strongly in the Pacific Basin, but the Atlantic Basin also will face increased imports, Petrie predicted. The Pacific Basin, led by Japan, South Korea, India and China, will account for about 75% of global LNG import volumes, while Europe will constitute the bulk of Atlantic Basin LNG imports, he said.
Click on the images at right to see projected LNG import volumes for Basic and Atlantic basin countries.
Petrie told the ENERCOM conference LNG demand was expected to grow strongly for more than a decade. U.S. LNG export terminals now operating or under construction will play a significant role meeting that expected surge in demand for the next few years, but a global gap between supply and demand is expected to develop in the early 2020s as the world's appetite for LNG grows and gas production declines in certain areas, he predicted.
By 2019, the U.S. will be the world's third-largest LNG exporter, at about 65 million tons per year, trailing Australia (87 million tons per year) and Qatar (81 million tons per year), he forecast.
"There will be global gas-on-gas competition," Petrie said August 15 in his lunchtime address. "It will be the U.S. versus Qatar for the European market. And, because the Panama Canal has been expanded, the U.S. will be able to fight Australia for Asian demand. It will be something totally different from anything we've seen before. It's going to be very interesting."
The U.S. will be able to fight for a share of the global LNG market because billions of dollars have been invested in recent years building LNG export terminals. Also, LNG commercial arrangements have shifted in recent years: "The transformation is now well underway for LNG exports from a point-to-point delivery model, to one with a multiplicity of markets embracing global gas-on-gas competition," he observed.
By 2023, he projected the U.S. will be exporting 15 million tons of LNG per year, and 20 million tons per year would come a few years after that. For more on recent developments with U.S. LNG export terminals, see August 11, 2017, article - Cheniere Energy Looks to Third LNG Train at Corpus Christi, August 9, 2017, article - Cheniere Raises Earnings Guidance for 2017 as LNG Exports Grow, and August 3, 2017, article - Dominion Energy: Cove Point LNG Facility 95% Complete.
Rising global demand for LNG is expected to lead to a surge in U.S. gas production, and an increase in gas prices, continued Petrie, who has four decades of experience as an Oil & Gas analyst. Gas production could be 80 billion to 85 billion cubic feet per day (Bcf/d) by 2023, and could rise as high as 90 to 95 Bcf/d that year, he predicted. A good bit of that incremental demand will be met by production from the Marcellus and Utica shales. "The ability of the Marcellus and Utica to match Qatar, Mcf for Mcf, is amazing," Petrie told the conference luncheon.
But the Marcellus and Utica, as prolific as they are, cannot carry the burden alone. In fact, he conceded there was a risk of over-drilling in those areas, with production outstripping the addition of new infrastructure and outbound pipeline capacity.
While gas production from the Fayetteville Shale is expected to increase, production is expected to soar from the Haynesville Shale, he said. "The Haynesville, Fayetteville and Barnett shales all feed into (the LNG terminals at) Sabine Pass," and that makes those areas a meaningful part of the fight for LNG market share, he said in a subsequent breakout session. "Production from the Marcellus is expected to rise the most, but there's only so much you can move through Cove Point," an LNG terminal in Maryland. "And it would be hard to move a lot of that Marcellus gas to Sabine Pass." He also expected LNG will be exported from the Eagle Ford shale through the Freeport LNG terminal.
Reflecting more broadly on U.S. and global energy markets, Petrie said his "intuition" was that crude oil prices would average about $70 in five years, which would translate into gas priced at $4 to $4.50 per thousand cubic feet (Mcf). In 10 years, he said oil prices could average $75 to $80 per barrel, with gas prices rising to between $5 and $6 per Mcf.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com/.
Demand for LNG is expected to grow most strongly in the Pacific Basin, but the Atlantic Basin also will face increased imports, Petrie predicted. The Pacific Basin, led by Japan, South Korea, India and China, will account for about 75% of global LNG import volumes, while Europe will constitute the bulk of Atlantic Basin LNG imports, he said.
Click on the images at right to see projected LNG import volumes for Basic and Atlantic basin countries.Petrie told the ENERCOM conference LNG demand was expected to grow strongly for more than a decade. U.S. LNG export terminals now operating or under construction will play a significant role meeting that expected surge in demand for the next few years, but a global gap between supply and demand is expected to develop in the early 2020s as the world's appetite for LNG grows and gas production declines in certain areas, he predicted.
By 2019, the U.S. will be the world's third-largest LNG exporter, at about 65 million tons per year, trailing Australia (87 million tons per year) and Qatar (81 million tons per year), he forecast.
"There will be global gas-on-gas competition," Petrie said August 15 in his lunchtime address. "It will be the U.S. versus Qatar for the European market. And, because the Panama Canal has been expanded, the U.S. will be able to fight Australia for Asian demand. It will be something totally different from anything we've seen before. It's going to be very interesting."
The U.S. will be able to fight for a share of the global LNG market because billions of dollars have been invested in recent years building LNG export terminals. Also, LNG commercial arrangements have shifted in recent years: "The transformation is now well underway for LNG exports from a point-to-point delivery model, to one with a multiplicity of markets embracing global gas-on-gas competition," he observed.
By 2023, he projected the U.S. will be exporting 15 million tons of LNG per year, and 20 million tons per year would come a few years after that. For more on recent developments with U.S. LNG export terminals, see August 11, 2017, article - Cheniere Energy Looks to Third LNG Train at Corpus Christi, August 9, 2017, article - Cheniere Raises Earnings Guidance for 2017 as LNG Exports Grow, and August 3, 2017, article - Dominion Energy: Cove Point LNG Facility 95% Complete.
Rising global demand for LNG is expected to lead to a surge in U.S. gas production, and an increase in gas prices, continued Petrie, who has four decades of experience as an Oil & Gas analyst. Gas production could be 80 billion to 85 billion cubic feet per day (Bcf/d) by 2023, and could rise as high as 90 to 95 Bcf/d that year, he predicted. A good bit of that incremental demand will be met by production from the Marcellus and Utica shales. "The ability of the Marcellus and Utica to match Qatar, Mcf for Mcf, is amazing," Petrie told the conference luncheon.
But the Marcellus and Utica, as prolific as they are, cannot carry the burden alone. In fact, he conceded there was a risk of over-drilling in those areas, with production outstripping the addition of new infrastructure and outbound pipeline capacity.
While gas production from the Fayetteville Shale is expected to increase, production is expected to soar from the Haynesville Shale, he said. "The Haynesville, Fayetteville and Barnett shales all feed into (the LNG terminals at) Sabine Pass," and that makes those areas a meaningful part of the fight for LNG market share, he said in a subsequent breakout session. "Production from the Marcellus is expected to rise the most, but there's only so much you can move through Cove Point," an LNG terminal in Maryland. "And it would be hard to move a lot of that Marcellus gas to Sabine Pass." He also expected LNG will be exported from the Eagle Ford shale through the Freeport LNG terminal.
Reflecting more broadly on U.S. and global energy markets, Petrie said his "intuition" was that crude oil prices would average about $70 in five years, which would translate into gas priced at $4 to $4.50 per thousand cubic feet (Mcf). In 10 years, he said oil prices could average $75 to $80 per barrel, with gas prices rising to between $5 and $6 per Mcf.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com/.
