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    Natural gas production could skyrocket as Houston's LNG industry grows

    November 27, 2022 - Amanda Drane, Houston Chronicle


      Nov. 25—The North American natural gas market is projected to triple in size thanks to the rapidly growing LNG industry along the Gulf Coast, according to a new report from U.K. research firm Wood Mackenzie.

      Over the next decade, gas production in North America could jump by 29 billion cubic feet per day as the continent responds to the world's growing demand for gas, the firm found.

      "The North America gas market expansion for the next decade will be equivalent to adding two new Permian basins," said Wood Mackenzie's Dulles Wang, director of gas and LNG research in the Americas. "As Europe diversifies to more secure supply sources and international buyers across the globe seek reliable low cost supply, North America is poised to deliver."

      The Ukraine war set off global shortages of natural gas and a race among LNG companies to build Gulf Coast facilities that can super-cool natural gas to a liquid and ship it overseas. Increases in natural gas production are happening in tandem.

      Gas prices in Europe are rising as Russia threatens to further reduce the supplies it sends to its western neighbors. Russia has said it may cut supplies traveling through Ukraine beginning next week, claiming Ukraine is diverting supplies intended for Moldova — an accusation the nation denies, said Wei Xiong, a senior gas and LNG analyst for Rystad Energy.

      U.S. states in the Northeast, meanwhile, have become vulnerable to natural gas shortages this winter as production in the Permian and Appalachian basins has been less than expected, Rystad said.

      Producers are reluctant to invest too much too soon on increasing production, Wood Mackenzie said, but will gradually increase their investments over the next few years to support the growing gas market. Any incremental increases will help put a damper on natural gas prices for a time until more LNG export facilities come online later this decade.

      While the wave of LNG growth will slow after 2030, the Inflation Reduction Act will continue to spur natural gas demand through its support of carbon capture and hydrogen projects, Wood Mackenzie said.

      "As more investments are made in new technology, gas will play a key role in the decarbonization of our energy industry, especially with the incentives provided by the IRA," Wang said. "It will ensure that natural gas will have a vital role to play for decades to come."


      (c)2022 the Houston Chronicle

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