A report on the U.S. natural gas industry recently released by Black & Veatch finds that demand from power generators, exports and the transportation/natural gas vehicle sectors is expected to rise for the foreseeable future. In its third annual report, Black & Veatch says that nearly 90% of industry respondents expect electric power generation to undergo material gas consumption increases by 2020.
Local distribution companies (LDCs) are seeking ways to secure low-cost gas from sources located closer to their markets and abundant supplies are encouraging capital flows to develop much needed pipeline infrastructure, according to the report.
"What a difference a year makes," John Chevrette, president of Black & Veatch's management consulting business, said in a release. "One year ago the mood across the natural gas value chain was one of cautious optimism. The 2014 report today reflects a marketplace surging with activity, driven in large part by low-cost shale gas. The strong demand for U.S. natural gas resources can help foster a new era of energy independence. Yet, it also requires industry and regulators to work together to ensure a sustainable path forward."
Safety remains the No. 1 long-term industry concern, while gas supply reliability and economic growth followed among the top 10 issues of concern. Yet, many challenges remain for the industry. More than 72% of midstream respondents identified delays from opposition groups as the dominant challenge to new pipeline development.
Other key findings of the report include:
-- Electric power pricing is increasingly tied to natural gas prices as it becomes the primary fuel for generation. 74% of respondents cited the growth in natural gas for power generation as a key driver of future North American natural gas price rises.
-- U.S. LNG exports will net both short- and long-term benefits to the country's economy. Increased shale gas production, increases in the U.S. natural gas price, and an increase in the U.S. economic benefit over the long term were cited as the top three potential outcomes of U.S. LNG exports.
-- Progress has been made across the industry's physical and cyber security programs. 80% of respondents noted the integration of cybersecurity and IT, up from 60% in 2013.
-- More than 31% of LDC respondents indicated the levels of system operation and maintenance costs had increased by more than 10% since 2013.
