Demand for natural gas around the globe and domestically will continue to rise dramatically, particularly in the LNG sector, the analyst said in the opening presentation of Hart Energy’s two-day DUG Gas Conference & Expo on March 19 in Shreveport, Louisiana. (Source: Shutterstock)
People watching the energy market have seen a major change over the last year in what could be summarized as the rise of “energy pragmatism.”
Amol Wayangankar, principal and founder of Enkon Energy Advisors, originally didn’t understand the phrase and had to ask a fellow in another market sector about what it meant.
“He said that’s a code word for ‘we can’t get rid of gas and oil yet,’” Wayangankar recalled. “And I said, ‘Yet?’”
Demand for natural gas around the globe and domestically will continue to rise dramatically, particularly in the LNG sector, the analyst said in the opening presentation of Hart Energy’s two-day DUG Gas Conference & Expo on March 19 in Shreveport, Louisiana.
The event features discussions on the energy industry as a whole with a focus on the natural gas industry in the Haynesville Shale.
Wayangankar took a look at the driving factors in natural gas demand. While the need to power AI data centers has garnered a lot of media attention lately, the analyst said the demand for LNG will be the driving factor for the next decade in natural gas.
"Power demand will not match LNG demand, it will be significantly lower, but everything adds up in the end," he said.
Globally, natural gas will play a leading role in the energy transition, as countries wean themselves off of coal-fired power plants to cut greenhouse gas emissions. The U.S. offers some of the most competitively priced and abundantly supplied LNG on the global stage, making a growing LNG manufacturing capacity the base load for natural gas.
“LNG production will be at 34 Bcf/d by 2033,” Wayangankar said. “Think about that, it was 13 Bcf/d a year ago.”
The estimates for power supply are less certain in the market. The analyst looked at electricity demand estimates of ERCOT, the Texas power grid, as an example. Current power demand estimates from the grid expect a doubling of demand to 150 gigawatts by 2030.
It is highly unlikely the state will be able to permit and build all of the power supplies to meet that demand, regardless of what is used to produce the power.
And over the last decade, while gas production has ballooned, available storage has had little to no growth.
The situation is likely to lead to price volatility, he said, as storage levels rise and fall quickly to supply outgoing LNG cargoes.
“Natural gas storage is going to be an asset class with a lot of value,” he said.
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