North American pipeline companies will add nearly 33 Bcf/d of natural gas transportation capacity from 2020 through 2025 despite COVID-19 pandemic interruptions and permitting hurdles, according to a new study released by an industry group.
The report cited rebounding liquefied natural gas exports as a fundamental driver for new pipeline infrastructure, predicting that shipments "will rise from 5.7 [Bcf/d] in 2019 to 11.7 [Bcf/d] by 2025." The report, "North American Midstream Infrastructure – A Near Term Update Through 2025," was prepared by business and policy analyst firm ICF Resources LLC for the INGAA Foundation, the research arm of the trade group Interstate Natural Gas Association of America.
In 2020, U.S. LNG exporters faced widespread cargo cancellations as global demand plummeted, but a recent buying spree in Asia has developers hoping that prices will remain high enough to persuade buyers to sign long-term commercial deals for new terminal projects in 2021.
Domestic gas use is also expected to increase through 2025, supporting new renewable energy sources, ICF said.
"With increasing renewable generation, there will be a need for additional fast-start, and in some instances, extended duration capacity, which can be provided by natural gas," the study noted. "Power generation gas use is expected to grow over the next five years despite a long-term push towards renewables and policies emphasizing clean ... energy adoption by some states."
Midstream heavyweights like Williams Cos. Inc. and Enbridge Inc. have highlighted the importance of maintaining gas flows even as they set targets for net-zero absolute carbon emissions by 2050.
"The bottom line is that any fair analysis that you look at right now that really gets after decarbonization pretty quickly has to lean on natural gas pretty heavily ... and you have to stay focused on the economic viability of that," Williams President and CEO Alan Armstrong said in a 2020 interview.
Still, the ICF report acknowledged that the environmental permitting process can hold up gas transportation capacity development, particularly in the Marcellus and Utica shales. "Major pipeline projects with total capacity of 2.6 [Bcf/d] that were expected to be completed in 2020 and about 5.3 [Bcf/d] with expected in-service dates between 2020 and 2025 have been delayed or cancelled since the beginning of 2020," the study said.
These cancellations included Williams' Constitution and Duke Energy Corp. and Dominion Energy Inc.'s Atlantic Coast pipeline projects, while the Equitrans Midstream Corp.-led Mountain Valley Pipeline LLC remains behind schedule. Environmental groups and landowners have challenged oil and gas pipeline projects based on concerns about whether they are in the public interest, especially considering the costs to the climate and the environment.
President-elect Joe Biden's administration will likely favor more stringent permitting requirements for interstate gas pipelines, but analysts at energy policy advisory firm ClearView Energy Partners LLC have said the Federal Energy Regulatory Commission may still be inclined to approve smaller-capacity additions like laterals "sited within and along existing infrastructure rights of way."
