Wednesday, May 15, 2019

A Pipeline Bubble? -- May 15, 2019

North America’s shale boom is paralleled by the record pace of pipeline construction and now, a long pipeline of projects await a final investment decision. Pipeline Bubble, produced by Global Energy Monitor, now calculates that capital spending on proposed North American pipelines will reach $232.5 billion and raise global pipeline capacity by a third.
Pipelines have an operational life of at least 50 years and investors are betting on higher volumes of domestic oil and gas output both for local consumption and for export, as the world’s demand for energy, led by India and China, is forecast to rise by a third by 2040. According to the EIA Annual Energy Outlook 2019 reference case, U.S. natural gas output is expected to rise 36 percent to 43.4 trillion cubic feet by 2050. Crude oil is set for annual records through to the mid- 2020s and remains greater than 14 million barrels a day until 2040. Also, Natural gas plant liquids production is set to reach 6.0 million barrels a day by 2030. Projections of supply and demand appear to favor a boom in pipeline construction and underpins the fact that gas pipe projects outnumber oil, four to one.
The power sector as a major gas customer will see the share of natural gas rise from 35.1 percent today to 39 percent in 2050 to satisfy rising demand and feed the rise in new gas peaking plants, which will be needed to provide base load and back-up for the anticipated rise in renewable energy.
Likewise, with demand for polyethylene expected to grow from 40 million metric tons last year to 60 million metric tons in the next two decades, new pipelines are under construction to meet the needs of new ethane cracker plants located along the Ohio River.
Increased drilling in oil formations in the East and Southwest of the country and burgeoning oil output from the Permian Basin has caused congestion of existing pipeline capacity to refineries on the Great Lakes as well as oil export terminals Houston and Corpus Christi on the Gulf Coast. New take-away pipes are close to completion and more are planned.
More at the link. A relatively short story, lots of data, will take a bit of time to digest. 

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