Picture: ISTOCK
Picture: ISTOCK

New York — Bottlenecks on the US natural gas super-highway are starting to stack up, raising the concern about whether infrastructure can be built fast enough to meet surging supplies.

Gas output will expand by 24-billion cubic feet (680-million cubic metres), or 32%, to the end of 2025 from last year, according to US Energy Information Administration (EIA) estimates. To support that growth, the country’s gas industry needs to spend $170bn over the next seven years on pipelines, compressor stations, export terminals and other related infrastructure, said Meg Gentle, CEO of gas exporter Tellurian.

"One threat to the US being able to export liquefied natural gas (LNG) and expand its export capability is the overall commitment to invest in infrastructure to move natural gas," Gentle said in an interview at the Bloomberg New Energy Finance (BNEF) Future of Energy Summit in New York on Tuesday.

It is a warning that for parts of the country the pipeline woes are not over yet. Appalachian producers have been grappling for the better part of the shale boom of the past decade with limited pipeline access. Spot prices there slumped to record lows last year and have started to rebound as new capacity starts up.

Permian problem

Now, the Permian Basin, known for its oil-rich layers of rock, is facing the threat of having to slow down the output of crude because drillers lack capacity to handle all the gas that is flowing as a mere byproduct.

For companies building multi-billion-dollar plants to chill gas into liquid and ship it abroad, the abundance of cheap gas from the Permian in West Texas is an advantage. Developments there "will happen" because it’s an environment supportive to energy infrastructure, Gentle said. That may not happen fast enough for Appalachia.

Producers are getting increasingly concerned about worsening pipeline constraints, Drillinginfo co-founder Allen Gilmer said during a panel at the BNEF summit. Its harder for the industry to get its hands around this because these limits are not being driven by operating or engineering issues but more by "social change and cultural conditions".

Bloomberg

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