![]() ![]() ![]() North America natural gas production by basin, Bft 3d. By 2030, the Permian and Appalachian basins are anticipated to supply approximately 55% of the North American gas market, while production from the Marcellus and Utica shales is anticipated to account for approximately 40% of total North American gas supply ( Fig. Thanks to pad drilling and advanced completion technologies, these two shale plays have seen new gas production per rig grow by a factor of 10 since 2008. First, technological improvements and increased efficiency have driven down breakeven prices for natural gas production in North America, making areas like the Marcellus and Utica more profitable. North America has two major advantages when it comes to consistently producing plentiful and low-cost natural gas. Nevertheless, gas will continue to play a crucial role in power generation from a reliability standpoint, if battery technology is not available at scale. As a result, gas demand growth in the power sector is expected to slow to 0.3%/yr from 2022–2030 as renewables become more competitive, eventually accounting for approximately 21% of power generation by 2030. This will encourage some power generation to switch from gas to renewables-solar, in particular. Post-2025, as their economics become more favorable, renewables could compete with inexpensive combined-cycle gas plants, even without subsidies. Therefore, power demand for gas is expected to grow at 2%/yr until 2022. This leaves room for an anticipated 67 GW of new gas-fired capacity to fill the gap in power supply. This trend will continue, with another 26 GW of coal-fired power capacity to be retired soon. A total of 58 GW of coal-fired power capacity has been retired since 2010, representing 20% of existing coal capacity. In the near term, gas is expected to replace coal generation, although it will face competition from renewables over the long term. In its base case, Wood Mackenzie expects US LNG exports to grow to 16 Bft 3d by 2030.Ĭoal use declines. US brownfield projects could be the first to come online, as pre-FID US projects are among the most attractive due to low CAPEX, outside of those in the Middle East. Post-2024, depending on how Asian demand levels evolve, the global LNG market will begin to rebalance. However, the potential remains for attractive projects to take FID during this period if they can beat the global cost curve with high financial and operational efficiency. By 2020, Wood Mackenzie expects a total of 10 Bft 3d of capacity to come online, equivalent to 13% of total US domestic gas demand.Īfter the buildout of existing projects reaches final investment decision (FID), the taking of FIDs for new North American LNG projects is expected to be challenging over the medium term (2021–2024), mainly due to the global LNG market being oversupplied. At present, Sabine Pass and Dominion Energy’s Cove Point LNG terminal are in operation, while another four terminals (Cameron, Freeport, Elba Island, Corpus Christi) are under construction. The first LNG export cargo from the lower 48 states came from Cheniere Energy’s Sabine Pass terminal in 2016 today, LNG exports have grown to 3 Bft 3d. As LNG is becoming increasingly important to global gas markets, the US has undergone extensive LNG terminal reconfiguration and construction to capitalize on the opportunity. LNG will play a major role in supporting demand growth for North American gas, accounting for more than 50% of growth to 2030 ( Fig. North America gas demand growth by sector, Bft 3d, 2017–2030. Overall, market conditions indicate that North American gas prices are expected to stay below $3/MMBtu for decades to come.įIG. The rapid development of shale could mean that more than $150 B of gas-related midstream investments will be needed by 2025 to enable abundant, inexpensive gas to reach demand centers. On the supply side, we expect shale gas to continue dominating, with the Permian and Appalachian basins supplying approximately 55% of the North American gas market by 2030. Looking ahead to 2030, we expect North American gas demand to grow at 2%/yr, fueled by the attractiveness of US LNG exports and the retirement of coal power plants. This change was enabled by the meteoric rise of shale, accounting for more than 50% of total gas production. Now, 10 yr later, the region has transitioned to a gas exporter with LNG import terminals converting to exports, and new pipelines shipping gas to Mexico. In 2008, North America was believed to be short of natural gas resources and in need of LNG imports. The shale revolution has changed the game for the North American natural gas market over the past decade. Industry Trends: Five trends shaping the North American gas market to 2030 ![]()
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