Billions Needed To Meet Long-Term Natural Gas Infrastructure Supply, Demands

By Rita Tubb, Managing Editor | January 2010 Vol. 65 No. 1
Billion $ in Natural Gas Pipeline, Storage, and Gathering Infrastructure, 2009-2030

$130 - $210 billion midstream expenditures
In the Midstream segment, the report forecasts that approximately $130 to $210 billion will need to be spent from 2009 to 2030 on midstream natural gas infrastructure in order to meet projected market requirements (Figure 1), equating to between $6 and $10 billion per year. Approximately 80 percent of necessary midstream infrastructure expenditures will be for natural gas transmission pipelines. Expenditures on new processing facilities will account for about 8 to 10 percent of the total investment on new midstream assets. Storage and LNG infrastructure, while important for efficient market operations, are projected to account for a relatively small portion of the total future investment needs. Current LNG terminal import capacity is underutilized and can accommodate projected growth.

The largest projected midstream infrastructure expenditures are expected to occur in the regions with the greatest projected growth in gas production. Shifts in natural gas supply sources are projected to be the main driver of midstream investments and not natural gas consumption growth. Canadian and Arctic expenditures are projected to represent 30 to 40 percent of future U.S. and Canadian expenditures. Most of the expenditures in these areas are related to the Alaska and Mackenzie Valley Pipeline Projects. If the roughly $50 billion required to construct the Arctic pipelines is not spent, then the portion of total investment that occurs in these regions will be significantly lower.

Natural gas consumption
In the Base Case projection, annual natural gas consumption in the U.S. and Canada is projected to grow from about 26.8 Tcf in 2008 to 31.8 Tcf by 2030, which equates to total market growth of 18 percent, or an annual growth rate of 0.8 percent. The two alternate cases, High Gas Growth and Low Electric Load Growth, bracket reasonable ranges of future gas consumption.

About three-fourths of the market growth occurs in the power sector, according to the report. The growth rate of natural gas consumption in the electric generation sector is the predominant determinant of the growth rate of the entire natural gas market. Electric load growth, timing and development of renewable generation technologies, clean coal with carbon capture and sequestration and expansion of nuclear generation are areas of uncertainty identified in the report.