IIR North American Outlook: Oil & Gas Here to Stay for Decades

Despite the ongoing transition from fossil fuels to renewables, natural gas isn't going away any time soon, according to Shane Mullins, Industrial Info's vice president of energy products and project development.

Mullins was one of the speakers at Industrial Info's 2024 North American Industrial Market Outlook event on January 17 in Sugar Land, Texas. He covered a broad swath of energy-related topics, such as the outlook for fossil fuels in the short- and long-term, the future of liquefied natural gas (LNG) project activity, production in the U.S. and Canada and the accompanying capital expenditures.

Regarding the future of natural gas in the energy mix, Mullins noted the tacit acknowledgement of natural gas as a transitional fuel during the COP28 global summit on climate change, which ran November 28 to December 12. The official communique from the summit "recognize(d) that transitional fuels can play a role in facilitating the energy transition while ensuring energy security." Many observers noted that appeared to be shorthand for natural gas, which emits about 50% of the carbon dioxide as coal does when burned to generate electricity. For more information, see December 15, 2023, article - U.N. Climate Summit Endorsed Transition Away from Fossil Fuels, but Questions Remain.

"Keep in mind the only fuel we ever successfully transitioned away from is whale oil and I don't expect that to occur with oil and gas for many decades," Mullins said.

"The reality is that renewable technologies, which are being deployed today, which is quite incredible, are really keeping up only with continued demand increases," he said. "Real reductions are not going to happen unless we drive down the use of coal, and the use of coal is switched with natural gas."

He continued: "So despite the many headwinds that seem to be out there against oil and gas, there are still a lot of mainstream capex investment that is moving forward in the U.S. and Canada today. There's $38 billion currently under construction."

Overall project spending will be up from last year if one includes the final investment decisions (FIDs) on LNG projects, Mullins said. The big reason for the growth in LNG projects is demand from Europe, which is still weaning itself from Russian natural gas in the wake of that country's invasion of Ukraine.

Also, the conflict between Israel and Hamas continues to impact LNG exports from Egypt to Europe.

"We are still witnessing a major ramp-up in planned LNG regasification under development across Europe," he said. Eight floating storage regasification units (FSRUs) are expected to be operational in the next year, which will increase Europe's import capability by 20%.

This is helping to propel LNG export projects in the U.S. Industrial Info is tracking six U.S. LNG projects that have received full approval, 12 projects that are awaiting FIDs, and two projects that are in the permitting stage or are in state economic development. In Canada, three active projects are being followed.

In the U.S., demand for natural gas is expected to grow by 17 billion cubic feet (Bcf) per day by 2030. A big chunk of domestic demand will come from the industrial sector, where $148 billion worth of projects are under construction. Industrial gas demand increased by 0.5 Bcf per day in 2022, and an additional 0.5 Bcf per day of industrial demand is expected by 2025.

Contact us?for more information.

If you want more news,?click here.