This year came from the United States the world’s largest exporter of liquefied natural gas (LNG). deliveries to energy-hungry buyers in Europe and Asia increased. So far this year, five developers have signed more than 20 long-term contracts to supply more than 30 million tons of LNG a year, or about 4 billion tons a day, to energy-hungry buyers in Europe and Asia.
Unfortunately, while the U.S. has the world’s largest backlog of near-shovel-ready LNG projects, takeaway constraints, including limited pipeline capacity, are seen as the industry’s biggest impediment to growth. In the Appalachian Basin, the nation’s largest gas-producing region, producing more than 35 billion cubic meters per day, environmental groups have repeatedly halted or slowed pipeline projects and limited growth in the Northeast. Indeed, EQT Corp. (NYSE: EQT ) CEO Toby Rice recently admitted that Appalachian pipeline capacity has hit a wall.
Fortunately, the Permian Basin and Haynesville Shale are still able to accommodate much of the LNG export growth forecast, including pipeline development. Analysts at East Daley Capital Inc. have predicted this US LNG exports to grow to $26.3 billion per day by 2030 from the current almost 13 Bcf/d. For that to happen, analysts say Haynesville will need another 2-4 Bcf/d of takeaway capacity to come online between 2026 and 2030.
And it looks like the United States is up to the task.
According to RigZone, initial findings of Westwood’s future aboveground pipeline market forecast have revealed that from 2022 to 2028 the world spends ~$369 billion on 310,000 km of new oil and gas pipelines, with the lion’s share in North America. According to the forecast, 205,000 kilometers, or two-thirds of all installations, will be gas pipelines, and several projects are already underway in the United States. Related: Is This The Next Big Step In Geothermal Energy?
Heavy investment in O&G pipelines is also expected in China as the country looks to increase imports, including the West-East Gas Pipelines 4 & 5 (totaling 6,323 km) and the Xinjiang Coal-to-Gas pipeline (8,372 km). Strong activity is also expected in Eastern Europe and FSU, due to the construction of additional pipeline capacity in Russia to serve the Asian market. In Africa proposed 6500 km Central African pipeline system Designed to connect 11 countries and improve energy supply security in the region, it could be one of the largest pipeline projects on the continent.
US gas projects underway
According to the Federal Energy Regulatory Commission (FERC), four U.S. LNG projects are currently under construction and 12 more have received approval from federal regulators, with four more proposed for a total of 40 billion cf/d of potential LNG exports.
The pivotal Permian Basin is gearing up to unleash a stream of gas and gas projects to meet explosive LNG and nat. gas demand. Energy transfer LP (NYSE: ET) is looking for build the next great pipeline move natural gas production from the Permian Basin. The company is also working on the Gulf Run pipeline in Louisiana, which will carry gas from the Haynesville Shale in Texas, Arkansas and Louisiana to the Gulf Coast.
As recently as May, a coalition of oil and natural gas companies WhiteWater Midstream LLC, EnLink Midstream (NYSE: ENLC), Devon Energy Corp. (NYSE: DVN ) and MPLX LP (NYSE: MPLX) announced that they had made a Final Investment Decision (FID) to proceed with construction of the building. Matterhorn Express Pipeline after obtaining sufficient fixed transport contracts with shippers.
According to the press release, ”The Matterhorn Express pipeline is designed to transport up to 2.5 billion cubic feet per day (Bcf/d) of natural gas about 490 miles through a 42-inch pipeline from Waha, Texas to the Katy area near Houston, Texas. Supply to the Matterhorn Express Pipeline is obtained from several upstream connections through the Permian Basin, including direct connections to Midland Basin processing facilities approximately 75 miles laterally and a direct connection to the 3.2 Bcf/d Agua Blanca Pipeline, a joint venture between WhiteWater and MPLX.
The Matterhorn is expected to be operational in the second half of 2024 pending regulatory approval.
WhiteWater CEO Christer Rundlof cited the company’s partnership with three pipeline companies in developing “the gradual transport of gas out of the Permian Basin as production continues to increase in West Texas.” Rundlof says the Matterhorn offers “first-class market access and superior flexibility for Permian shippers while playing an important role in minimizing increased volumes.”
The Matterhorn joins a growing list of pipeline projects designed to capture growing volumes of Permian supply for shipment to downstream markets.
WhiteWater revealed plans to expand Whistler Pipelinen capacity of about 0.5 Bcf/d, 2.5 Bcf/d in three new compressor stations.
MPLX has several other expansion projects under construction. The company says it will complete construction of two processing plants this year and recently made a final investment decision to expand its Whistler pipeline.
Also in May Kinder Morgan Inc. (NYSE: KMI) subsidiary launched an open season to gauge shippers’ interest in expanding 2.0 Bcf/d Gulf Coast Express Pipeline (GCX).
At the same time, KMI has already completed the binding open season Permian Highway Pipeline (PHP), where the basic carrier is already in place for half of the planned 650 MMcf/d expansion capacity.
The US Department of Energy has sought to increase LNG exports to the European Union to prevent an energy crisis amid Russia’s war on Ukraine. allows for additional LNG exports The planned Golden Pass LNG terminal in Texas and the Magnolia LNG terminal in Louisiana.
Jointly owned ExxonMobil (NYSE: XOM) and Qatar PetroleumThe $10 billion Golden Pass LNG export project is expected to start in 2024, while Magnolia LNG, owned by the Glenfarne Group, will be operational by 2026. The two terminals are expected to produce more than 3 billion cf/d of natural gas, although Magnolia has yet to sign contracts with customers.
In the past, American LNG developers were unwilling to build self-financed liquefaction plants that are not secured by long-term contracts with European countries. However, the war in Ukraine has exposed Europe’s soft underbelly and the harsh reality forces them to rethink their energy systems. Germany, Finland, Latvia and Estonia recently expressed their desire to proceed with the construction of new LNG import terminals.
Meanwhile, DoE has approved the extended permits for Cheniere Energy‘s (NYSE: LNG ) Sabine Pass terminal in Louisiana and its Corpus Christi plant in Texas. The approval allows the terminals to export 0.72 billion cubic feet of LNG per day to any country with which the United States does not have a free trade agreement, including all of Europe. According to Cheniere, the plants are already producing more gas than the previous export licenses cover.
By Alex Kimani for Oilprice.com
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