October 2009 Vol. 236 No. 10

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INGAA: At Least $133 Billion Investment in Natural Gas Infrastructure Needed by 2030

Projected growth in North American natural gas supplies and market growth will require billions of dollars of additional investment in pipeline, storage and other midstream infrastructure through 2030, according to a new study released Oct. 20 by the INGAA Foundation Inc.

“Natural Gas Pipeline and Storage Infrastructure Projections Through 2030” analyzes future natural gas infrastructure requirements under various market scenarios anticipates a range of investment from $133 to $210 billion in infrastructure over the next 20 years (between $6 and $10 billion per year), primarily to attach increased domestic natural gas production from unconventional shale basins and tight sands to the existing pipeline network. Anticipated market growth from the electric generation and industrial sectors as well as the potential to connect vast Arctic resources and LNG supplies to the grid will also be key drivers for additional investment, according to the study.

“The domestic supply picture for natural gas has been redrawn and experts agree we now have more than 100 years of technically recoverable gas in the U.S. and Canada,” said Gary Sypolt, chairman of the INGAA Foundation. “This study spotlights what this sea change in domestic supply will mean for investment in additional pipeline, storage and midstream infrastructure.”

According to the study, by 2030, the U.S. and Canada will need approximately 29,000 to 62,000 miles of additional natural gas pipelines and 370 to 600 billion cubic feet (Bcf) of additional storage capacity, in order to accommodate market requirements. The majority of storage capacity additions are projected to be high deliverability salt cavern storage, which would essentially double current capacity. Insufficient infrastructure development could lead to price volatility, reduced economic growth and diminished delivery of gas supply to consumers who need it most.

Other key conclusions from the study include:

• Other infrastructure needed from 2009 to 2030:
  -6.6 to 11.6 million horsepower of new gas transmission pipeline compression
  -15,000 to 26,000 miles of new gathering pipelines
  -20 to 38 Bcf per day of new natural gas processing capacity
  -3.5 Bcf per day of new LNG import terminal capacity
• In the “base case” projection, annual natural gas consumption in the U.S. and Canada is projected to grow from about 26.8 trillion cubic feet (Tcf) in 2008 to 31.8 Tcf by 2030, which equates to total market growth of 18 percent, or an annual growth rate of 0.8 percent. The two alternate cases, “high gas growth” and “low electric load growth,” bracket reasonable ranges of future gas consumption.
• About three-fourths of the market growth occurs in the power sector. The growth rate of natural gas consumption in the electric generation sector is the predominant determinant of the growth rate of the entire natural gas market. Electric load growth, timing and development of renewable generation technologies, clean coal with carbon capture and sequestration, and expansion of nuclear generation are areas of uncertainty.
• Interregional transmission pipeline capacity between major areas throughout the U.S. and Canada is currently approximately 130 Bcf per day. By 2030, the need for interregional natural gas transport is likely to increase by between 21 and 37 Bcf per day, driving development of additional pipeline and storage capacity. Interregional natural gas transport capacity will be needed even without a growing North American natural gas market due to shifts in the location of natural gas production. The need for laterals to access new production and deliver natural gas to new customers, such as new gas-fired power plants, also will drive investment.

The complete study prepared for the INGAA Foundation by ICF International is available here.