2022 Market Outlook: Rising Production Means More Expansions to Processing Plants, Pipelines

---

Researched by Industrial Info Resources (Sugar Land, Texas)--Growing global demand for natural gas and natural gas liquids (NGL) means the U.S. will need more processing and takeaway capacity in the years to come, said Shane Mullins, Industrial Info's vice president of Product Development, during a webinar on the 2022 U.S. & Canada Industrial Market Outlook. Both the gas-processing and transmission industries will need to accommodate rising production with expanded capacity.

Mullins noted the U.S. now holds the world's top spot in liquefied natural gas (LNG) exports, and demand for natural gas as a feedstock will only continue to soar. Projects driven by this demand include Cheniere Energy Incorporated's (NYSE:LNG) (Houston, Texas) highly anticipated Train 6 at the Sabine Pass facility in Louisiana, which has notched up progress in recent months at a faster pace than expected, as well as Exxon Mobil Corporation (NYSE:XOM) (Irving, Texas) and Qatar Energy's Golden Pass project in Texas and Venture Global LLC's (Houston) Calcasieu Pass project in Louisiana.

Subscribers to Industrial Info's Global Market Intelligence (GMI) Oil & Gas Pipeline Project Database can read detailed project reports on the Sabine Pass Train 6, Golden Pass and Calcasieu Pass projects under construction.

In addition, rising wet gas production in both the Permian Basin and the Montney-Duvernay region in Canada will require additional NGL recovery trains beyond the six gas-processing projects under construction, Mullins said.

Click on the image at right for a pair of graphs detailing a potential supply gap for LNG, based on projections from Industrial Info, and LNG capacity in various phases of development.

"We still have strong LNG demand fundamentals, especially with the increased volatility in LNG pricing that we've seen in Europe, competing for spot LNG in Asia," Mullins said. "The record-high spot LNG prices this winter brought buyers back to the table, willing to sign the long-term agreements necessary to finance LNG liquefaction projects."

More pipelines will be needed to service facilities engaged in the processing and exporting of LNG. Examples of grassroot projects under construction include Venture Global LNG Incorporated's (Washington, D.C.) $75 million gas East Lateral and $70 million West Lateral pipelines for its Calcasieu Pass export facility in Cameron, Louisiana. The lines, which run about 24 miles and 18 miles, respectively, will carry up to 2 billion cubic feet per day from stations in Grand Chenier and Johnson's Bayou, Louisiana, to Venture Global's Calcasieu Pass export plant in Louisiana, which is nearing the production of its first LNG. Subscribers can read detailed reports on the East Lateral and West Lateral projects.

Mullins said most midstream companies developing natural gas and NGL pipeline projects are prioritizing expansions, repurposing and extensions of exiting assets. Examples include Kinder Morgan Incorporated's (NYSE:KMI) (Houston, Texas) Evangeline Pass Expansion Project in Louisiana and Mississippi, which would provide Venture Global's Plaquemines LNG export project in Cameron, Louisiana, with up to 1.1 billion cubic feet per day of natural gas, via additions to Kinder Morgan subsidiary Tennessee Gas Pipeline Company LLC's existing system. Subscribers can click here for a list of related projects.

"You have more pipelines that are going in Canada to connect production in Alberta to incremental market demand," Mullins said. "While both the Permian Basin and Marcellus will acquire additional major pipeline takeaway additions by 2024, the majority of capital-spending is going to be limited to those incremental capacity increases and compressor additions that we see moving forward, and adapting pipelines to accommodate more renewable gas and piloting the blending of green hydrogen on existing lines."

Among the proposed hydrogen-blending projects is a pilot program for Williams Companies Incorporated's (NYSE:WMB) (Tulsa, Oklahoma) Regional Energy Access expansion in Pennsylvania and other parts of the U.S. Northeast. Williams aims to expand access to "cleaner, cost-effective energy" in the region by the 2023-24 winter heating season, and it aims to make its system "adaptable to future renewable energy sources, like clean hydrogen and RNG [renewable natural gas] blending." Subscribers can click here for a list of related projects.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 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.