Natural Gas Demand Cycle to Start All Over Again?

The other day I heard someone make a US natural gas demand call for a 100 plus Bcf/d by 2021.  This is a jaw-dropping forecast considering the US natural gas market is at about 72 Bcf/d today.  An incremental 28 Bcf/d – a bigger volume than the entire Marcellus & Utica combined.  The speaker achieved his goal and got my attention if nothing else (and by the way BTU Analytics’ natural gas demand forecast through 2021 is more conservative at an incremental 10-15 Bcf/d by 2021).  However, let’s consider this aggressive demand forecast and the reality in order to achieve 100 plus Bcf/d. To start with, every switching opportunity for gas in North America has to switch at maximum capacity – Mexico exports, LNG, industrial demand, power burn to name a few.  And if North America goes all in on gas, doesn’t this set up a start of the natural gas demand cycle all over again (remember the power plant demand build out driven by Enron, Duke, El Paso and Dynegy of the late 1990s/early 2000s which pushed Henry Hub moving from $2 range in 1999-2000 spiking to over $10 in January 2001)?

In order to reach 100 plus Bcf/d demand, on the supply side, the resource is there, albeit the North American gas market would need to rally to higher price levels than where they are today to achieve the necessary production response.

On the demand side, again every gas opportunity has to go at maximum capacity.  Mexico exports have an incremental 8 Bcf/d of pipe capacity being built – fill it all 24-7-365.  LNG has an incremental 7 Bcf/d of permitted and under construction terminal capacity – fill it all.  That gets us 15 Bcf/d.  Industrial demand and res/com will have to add a few Bcf here and there.  The rest of the 13 Bcf/d gap, to get to the 100 Bcf/d demand forecast, would fall on power burn.

Read more: https://btuanalytics.com/natural-gas-demand-cycle/

Views: 2015

▶ Reply to This

Replies to This Discussion

Permalink Reply by Albert Russell on September 14, 2016 at 12:28pm
Nice article as many coal power plants convert to gas and new gas power plants come on line. This could easily happen.
Permalink Reply by WV Mineral Owner on September 15, 2016 at 7:00am

Has anyone heard / seen any information on how demand will be affected once the various cracker plants are built and in full production capacity?

Permalink Reply by Jim Litwinowicz on September 15, 2016 at 12:16pm

Hopefully one of the demand centers would be for road tractors that are converted from diesel to nat gas.  That would be a huge demand. ....not to mention cleaner air, reduced imports, a hundred thousand jobs, huge tax revenue, reduced imports. etc

Permalink Reply by Coffeeguyzz on September 15, 2016 at 3:13pm

Jim L

Natgas for transportation uses will not surge in the near term, but, 5 years out or so, the Adsorbed Natural Gas (ANG) technologies will most definitely be having an impact.

Right now, it is technically possible to manufacture and install formable tanks with the liquid gallon of gas equivalent of 16 gallons.

Right now, it is technically possible for a homeowner to fill up his CNG car/truck at home with sub 500 psi natgas piped to his house.

The economic upside to this is far reaching and will be seen first in commercial applications.

We are on the cusp of entering the Age of Gas.

Permalink Reply by Magnetron12 on September 15, 2016 at 4:47pm

YES PLEASE GET THEM NASTY DIESELS OFF THE ROAD...

ROB

Permalink Reply by James L. Mitchell on September 21, 2016 at 9:26am

More Repiglicans spreading lies about hillary.

Permalink Reply by WV Mineral Owner on September 21, 2016 at 11:19am

Hillary does well on her own when it comes to spreading lies, she does not need any assistance from Republicans.

I appreciate your generalization and deciding that I am a "RePIGlican" without knowing the slightest thing about me, simply by what political party I select for primary elections.  Such assumptions and generalizations, speak loudly about yourself.

RSS

© 2024   Created by Keith Mauck (Site Publisher).   Powered by

Badges  |  Report an Issue  |  Terms of Service