East Daley was quoted in Natural Gas Intelligence
East Daley Analytics Inc.’s Rob Wilson, vice president of analytics, said U.S. exploration and production (E&P) companies could see the impact of those new market dynamics as soon as this spring with a slump in natural gas prices.
While the retirement of coal does mean some incremental increases in natural gas demand in the power sector, Wilson told NGI signs of demand growth have been marginal. Even as the war in Ukraine limits the ability of utilities to switch to coal when natural gas is more expensive, natural gas production has outpaced added domestic demand.
Wilson said in a year’s time, the conversation among E&P firms has gone from increasing value for stakeholders and meeting ESG goals –what he called “capital discipline 2.0”– to figuring out how to retain that value while meeting domestic and international demand for more energy.
“It’s just not an either/or situation, especially not today,” Wilson said. “‘Capital discipline 2.0’ has really changed to an energy security plan.”
Producers have been adding rigs throughout the year, mostly in the Permian Basin, adding more than 130 rigs between January and September, according to East Daley data. By the end of next year, East Daley projects there could be more than 5 Bcf/d in added natural gas production, flooding domestic markets.
The only substantial additions to natural gas demand will come from LNG exports, Wilson said, but could take more than a decade to restore the balance without production cuts. The first train of ExxonMobil and QatarEnergy’s Golden Pass LNG, currently under construction southeast of Houston, could start up in 2024, with the second and third trains expected to follow in 2025. Venture Global LNG Inc. is still commissioning the Calcasieu Pass terminal in Louisiana, with September feed gas deliveries averaging about 1.5 Bcf/d.
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