Chris McGill Natural gas market indicators

Microsoft Word - NGMI 108 May 13 2009.doc

In keeping with the supply asset theme from the previous market indicators report, the Interstate Natural Gas Association of America released a report on October 20, 2009 that examines estimated midstream infrastructure requirements under various market scenarios. The report points to $130-240 billion that may be spent on midstream assets between now and 2030 ($6-10 billion per year) with about 80 percent targeting natural gas transmission pipelines.

Most of the pipeline infrastructure is suggested to connect new gas supply rather than to meet specific consumption increases. Two additional interesting components of the outlook include $50 billion in expenditures for connecting arctic gas to the North American grid and a baseline expectation of consumption growth to more than 31 Tcf per annum by 2030. This view is more aggressive for natural gas demand than the current Energy Information Administration outlook, which doesn’t exceed 25 Tcf by 2030.

In the near term, economic data suggests that we may soon see an end to the “official” recession, with a positive reading on third quarter Gross Domestic Product.   Economic fundamentals (and their resulting impact on demand) have been a bit of a wild card in recent months, and if the economy heats up we may see renewed tightness in the supply/demand balance.

Visit this link to download the full Natural Gas Market Indicator. Topics covered include: Reported Prices, Weather, Working Gas in Underground Storage, Natural Gas Production, Rig Counts, Pipeline Imports and Exports, and LNG Markets.

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