June 24, 2019

Natural Gas Production Will Increase – And With It, The Demand For Infrastructure

According to MSCI’s partners at the Energy Equipment and Infrastructure Alliance (EEIA):

  • The U.S. Energy Information Administration (EIA) predicts additions to U.S. natural gas-fired electric generating capacity will add up to 235 gigawatts by 2050, up about 50 percent from today’s in-service capacity of 475 gigawatts, as we continue the switch toward lower-carbon fuels.
  • Current generating capacity consumes about 30 billion cubic feet per day (bcf/d) of natural gas, which means the new capacity additions will require 10 to 15 bcf/d of additional production along with necessary new pipeline delivery capacity.
  • Another 15-20 bcf/d of natural gas will be needed to supply fifteen liquified natural gas (LNG) export terminals already under construction or fully permitted, with most coming online between now and 2024. Another twelve projects with up to 17 bcf/d of additional capacity have been applied for.
  • Pipeline exports to Mexico, now about five bcf/d, have the potential to double over the next several years. According to EIA, existing cross-border capacity, primarily from Texas, already equals 11 bcf/d. Mexican natural gas consumption for power generation and industrial uses continues to grow while domestic production declines. U.S imports will fill the gap as Mexico adds needed new internal pipelines.
  • This all adds up conservatively to at least 35 bcf/d of new production on top of the 90 bcf/d of current production – a roughly 40 percent increase in production over the next 2 to 3 decades. Over half of this will come in the next five to seven years from exports alone.

EEIA concludes, “The scale of business opportunity and job creation in building and operating this new infrastructure is staggering, especially in the supply chain, which includes construction, equipment, materials, services and supplies.”