New research released this week by a pair of leading energy analytics and intelligence firms shows how current events are having a big impact on energy investments, outside of the renewable energy and electric vehicle segments. Both studies predict that much of the investment will be centered along the Gulf Coast of Texas and Louisiana.
The Norwegian company Rystad Energy published a report on Wednesday that predicts a rather incredible increase in global investment in new import/export infrastructure related to liquefied natural gas (LNG). The report forecasts LNG-related investments to reach $42 billion by 2024, a 50% increase over current year spending and 21 times the $2 billion invested in such facilities in 2020 .
In a statement, the authors of the report said that “new LNG projects are mainly driven by a short-term increase in demand for natural gas in Europe and Asia due to Russia’s war in Ukraine and sanctions and consequent restrictions on Russian gas exports”. The $42 billion in new investment expected in 2024 compares to Rystad’s valuations of $27 billion in 2021, $28 billion this year and $32 billion expected in 2023, which will lead to a total investment explosion. over four years of $129 billion for the LNG sector.
Equally interesting, Rystad then sees new LNG-related investments fall off a cliff, falling back to just $2.3 billion by 2029, as governments focus on increasing investment in energy sources. renewable energy. The company sees a rebound in 2030, with planned investments of $20 billion.
“Recent price spikes in natural gas markets around the world have somewhat constrained gas demand, triggering a resurgence in coal-fired power generation in many countries. However, governments remain optimistic about gas as an affordable transition fuel for electricity in the coming years, as evidenced by the rapid growth in LNG infrastructure investment,” said Palzor Shenga, Vice President of the analysis at Rystad, in the press release.
These critical infrastructure investments have become increasingly urgent in recent months as European customers have found themselves paying record prices for LNG imports as they attempt to wean their countries off Russian supplies. S&P Global Commodities reported on Wednesday that LNG shipments for October delivery in Northwestern Europe were priced at 60.183 mBtu on August 22, more than 6 times the Henry Hub price for US domestic gas.
Unsurprisingly, Rystad predicts that a significant percentage of new investment will take place in the United States, primarily along the Gulf Coast: “The $10 billion Golden Pass LNG project in Texas, a joint venture between QatarEnergy (70% ) and ExxonMobil
Meanwhile, a report by US energy analytics and intelligence firm Enverus predicts major new investments in carbon capture, utilization and sequestration (CCUS) following the passage of the Biden climate spending bill. The report, compiled by the company’s Enverus Intelligence Research (EIR) subsidiary, predicts that much of the new investment will take place in the state of Louisiana, which is rich in types of subterranean formations suitable for CCUS projects.
In a statement, the report’s authors said, “EIR records document 10 million tonnes per year of operational global sequestration capacity, which is only 3% of planned capacity. When evaluating sequestration locations, reporting and ranking considered reservoir quality and proximity to point sources of emissions and transport as leading indicators. As a result, the Oligocene-Miocene of southern Louisiana, with its clean sand aquifers, stood out among many places and is now considered one of the best storage reservoirs in the world by the EIR.
Evan MacDonald, senior geology associate at Enverus, added, “With the recent substantial increase in CCUS project announcements in the lower 48, southern Louisiana stands out as a major hotbed for current and future sequestration activity. To develop an idea of how these projects stack up in terms of storage potential and to gain insight into future project potential, a good understanding of the reservoir into which injection is essential.
The report’s authors go on to say that the CCUS-related tax credit and other incentives contained in Biden’s climate spending bill are likely to trigger what they call a “rush” to launch such projects in the months and years to come. With ExxonMobil, Shell and other major companies already mounting large CCUS projects centered along the Gulf Coast of Texas and Louisiana, this region is expected to increase its role as a major center of concentrated U.S. energy investment for years. coming.