Bloomberg's imaginary "demand problem" for US natural gas

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A & nbsp; recentBloomberg& nbsp; article m "made the wheels spin:"The biggest threat to an award winning gas is expelled from homes. "

You can read the article yourself, but the basic idea is that the demand for natural gas for residential use in the United States is decreasing because of the blockage of the pipes and connections and the lowering of the costs of the wind and solar energy. & Nbsp;Bloomberg& nbsp; calls it "one of the biggest threats to the natural gas industry."

I'm not here to criticize anyone, but let me add my two cents.

First, I really hope that the US gas industry does not rely on residential demand to stimulate expansion.

The sector does not have & nbsp; moved since 1970! (see below) and EIA expects more of the same& nbsp; flatness as far as the eye can see.

Although half of all American homes are still heated with natural gas, the & nbsp; residential dwellings now represent & nbsp;15-17% of total gas demand in 2018against 22-24% 15 years ago.

In contrast to residential and stationary gas demand for 50 years, overall US natural gas consumption has increased by almost 45%. More importantly, in the era of shale since 2008, a period in which natural gas became our preferred source of energy, our consumption increased by more than 30% to reach 81-84 Gcf / j.

It is interesting to note that & nbsp; although & nbsp;Bloomberg & nbsp;quotes New York as a state where there is "resistance to gas heating," Annual residential gas demand in New York broke a record in 2018 in & nbsp;almost 480 Gcf, up 33% since 2012 alone.

I tell people to consider the new demand for natural gas in the United States as a giant triangle: & nbsp; in order of additional potential, 1) exports, 2) energy production, and 3) manufacturing (industrial sector). Certainly, demand creation is a constant process for all energy sellers, especially for a US natural gas industry that has seen its domestic production increase by 55% in the shale era since 2008, rising by 12% in 2018 (, new offer overflowed).

Let's start with electricity, that the & nbsp;BloomberAn article cites as a growing medium that Americans heat their homes to reduce their home gas use.

It's really very true, but More electric heating will actually help and not hurt the demand for natural gas

Natural gas represents a 35% increase in energy production in the United States and is increasingly becoming the utility's fuel of choice to replace coal and nuclear and help safeguard intermittent wind and solar power. . For example, at 1 470 TWh in 2018, natural gas provided 5.4 times more electricity than wind and 16 times more than solar.

In 2018, gas for electricity consumption broke a record & nbsp;at more than 10.6 Tcf in 2018, up 31% from 2014 alone.

And what happened is prologue: & nbsp; EIA the forecasts& nbsp; that natural gas will add 235 GW of new generation capacity in the United States in the next three decades, nearly 10 times more than wind and 34% more than solar additions.

Indeed, the "deep electrification"(for example, electric cars) which Bloomberg& nbsp; the mentions will obviously help the natural gas by increasing the need of energy, the principal mode of use of the gas.

Our gas industry has a smart focus on electricity: this sector now accounts for 35% of US gas consumption, down from 28% in 2008.

However, exports represent the largest market for additional demand in the United States, particularly LNG, an industry that really started a few years ago.

From 2014 to 2018, annual LNG exports to the US increased by & nbsp; 70 times & nbsp;at around 1.1 Tcf.

With three new facilities connected for a total of six, we will have almost tripled our export capacity to 9-10 billion cubic feet per day by the end of the year. And we will become the third largest LNG exporter, and will likely become the & nbsp; number one before 2025.

FERC is reviewing an impressive number of at least 70 LNG export projects having a combined shipping capacity & nbsp; 57 Gcf / d.

While not maintaining the unlimited potential of LNG, gas pipelines in Mexico is also a key demand sector, accounting for 6% of US production.

US gas exports must be seen as a vital sector of basic demand: exports generate more domestic production , help the sector to develop. & nbsp;

Although the smallest market for increasing US gas demand, industrial use has increased by over 25% over the last 10 years to 8.3 Tcf per year.

And the future is even more promising. We now have $ 200 billion worth of plastic projects on the Gulf Coast that will use cheap shale gas from the United States.

And as & nbsp; region accounting for 37% of total US gas production, US Secretary of Energy Rick Perry and others are pushing the Appalachians to become the next shale-based production hub.

the Bloomberg "California" and "New York" article titles Three and four times, respectively, as examples of states using policies to block residential gas connections. & nbsp; I've spent more than 10 years explaining why the energy policies of these two states are just not relevant to & nbsp; other, then I'm going back.

California and New York should be seen as states opposed to pipelines with anti-production policies on fossil fuels. & Nbsp; It means that they depend on other states and even countries& nbsp; for oil and gas supplies. Both companies have & nbsp; installed a model of & nbsp; higher energy prices in order to reduce their consumption and, consequently, their greenhouse gas emissions.

For example, residential electricity and gas rates are approximately 50% and 20% higher respectively in California and New York than in the rest of the country (see below). Other states are opposed to this higher cost paradigm because higher prices are hurting families and businesses.

An annual event now, Chief Executive Magazine just ranked New York and California in last place, 49th and 50th respectively, for "Best States for Businesses." The higher cost energy is one of the main reasons. Policies in & nbsp;BloombergMbadachusetts and New England are just as irrelevant.

Demonstrating how other states are looking for a very different path, & nbsp;there is now a narcotic 27 pipelines worth $ 33 billion and 23 billion cubic feet per day take-out capacity in the Appalachians to supply the region and other states & nbsp; more shale gas Marcellus and Utica.

The very reason why & nbsp;FERC& nbsp; and other regulators approve these pipelines primarily because the demand for gas they carry is obvious.

Funny enough, New York and California could use this source as natural gas remains their main source of electricity.

Indeed, & quot; gas resistance & quot; is not as strong as has been said: the EIA sees the total US gas demand (without even including exports) & nbsp;up about 20% until the last year of its projection (2050).

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A recent Bloomberg This article made my wheels spin: "The biggest threat to an award winning gas is getting kicked out of your home."

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You can read the article yourself, but the basic idea is that the demand for residential natural gas in the United States is declining because of the blockage of the pipes and the connections and the lowering of the costs of the wind and solar energy. Bloomberg calls it "one of the biggest threats facing the natural gas industry".

I'm not here to criticize anyone, but let me add my two cents.

First of all, I really hope that the US gas industry does not rely on residential demand to stimulate expansion.

The sector has not moved since 1970! (see below) And EIA expects more of the same flatness as far as the eye can see.

Although half of US households continue to heat on natural gas, the residential sector now accounts for 15 to 17 percent of total gas demand in 2018, up from 22 to 24 percent 15 years ago.

In contrast to stable residential gas demand for 50 years, overall US natural gas use has increased by almost 45%. More importantly, in the era of shale since 2008, a period in which natural gas became our preferred source of energy, our consumption increased by more than 30% to reach 81-84 Gcf / j.

Interestingly, although Bloomberg quotes New York as a state where there is "resistance to gas heating", the annual demand for residential gas in New York reached a record in 2018 at nearly 480 billion cubic feet, up 33% since 2012 only.

ARTICLE CONTINUES AFTER ADVERTISING

I tell people to consider the new demand for natural gas in the United States as a giant triangle: in order of incremental potential, 1) exports, 2) energy production, and 3) manufacturing (industrial sector). Certainly, demand creation is a constant process for all energy sellers, particularly for a natural gas industry in the United States, whose domestic production has increased by 55% in the shale era since 2008, up 12% in 2018 the offer was exceeded).

Let's start with electricity, that the BloomberAn article cites as a growing medium that Americans heat their homes to reduce their home gas use.

It's really very true, but More electric heating will actually help and not hurt the demand for natural gas

Natural gas represents a 35% increase in energy production in the United States and is increasingly becoming the utility's fuel of choice to replace coal and nuclear and help safeguard intermittent wind and solar power. . For example, with 1470 TWh in 2018, natural gas provided 5.4 times more electricity than wind and 16 times more than solar.

ARTICLE CONTINUES AFTER ADVERTISING

In 2018, gas for electrical consumption reached a record 10.6 billion cubic feet in 2018, up 31% from 2014.

And the prologue is over: the EIA expects natural gas to add 235 GW of new production capacity in the United States in the next three decades, nearly 10 times more than the wind will add and 34% more than solar energy additions.

Indeed, "deep electrification" (for example, electric cars) that Bloomberg Mentions will obviously help natural gas by increasing the need for energy, the main mode of use of gas.

Our gas industry has a smart focus on electricity: this sector now accounts for 35% of US gas consumption, down from 28% in 2008.

However, exports are the largest additional demand market in the United States, particularly LNG, an industry that really started a few years ago.

From 2014 to 2018, annual LNG exports to the United States increased 70-fold to about 1.1 billion cubic feet.

ARTICLE CONTINUES AFTER ADVERTISING

With three additional online facilities for a total of six, we will have nearly tripled our export capacity to 9-10 Bcf / d by the end of the year. And we will become the third largest LNG exporter, probably becoming number one before 2025.

FERC is currently reviewing 70 or more LNG export projects with a total shipment capacity of 57 Bcf / d.

While not capturing the unlimited potential of LNG, gas pipelines in Mexico is also a key demand sector, accounting for 6% of US production.

US gas exports must be seen as a vital sector of basic demand: exports generate more domestic production , help the industry to grow.

ARTICLE CONTINUES AFTER ADVERTISING

Although the smallest additional market for US gas demand, industrial use has grown more than 25% over the past 10 years to 8.3 billion cubic feet. per year.

And the future is even more promising. We now have $ 200 billion worth of plastic projects on the Gulf Coast that will use cheap shale gas from the United States.

And as the region accounts for 37% of total US gas production, US Secretary of Energy Rick Perry insists that the Appalachians become the next pole of shale production.

the Bloomberg This article mentions on three and four occasions "California" and "New York", respectively, as examples of states using policies to block residential gas connections. I have spent more than 10 years explaining why the energy policies of these two states are simply not relevant to other states, so I start again.

California and New York should be considered anti-pipeline states with anti-production policies for fossil fuels. This means that they depend on other states and even countries to stock up on oil and gas. Both have put in place a higher energy price model aimed at reducing the use and hence the emissions of greenhouse gases.

ARTICLE CONTINUES AFTER ADVERTISING

For example, residential electricity and gas rates are approximately 50% and 20% higher respectively in California and New York than in the rest of the country (see below). Other states are opposed to this higher cost paradigm because higher prices are hurting families and businesses.

An annual event now, Chief Executive Magazine has just ranked New York and California last, 49th and 50th respectively, in the "Best States for Business" ranking. The most expensive energy is a main reason. Policies in BloombergMbadachusetts and New England are equally irrelevant.

Demonstrating that other states are looking for a very different path, there are currently 27 pipelines worth $ 33 billion, with a capacity of 23 billion cubic feet per day selling in the Appalachians to supply more shale gas Marcellus and Utica.

The very reason why the FERC and other regulators have approved these pipelines in the first place is that the demand for gas they carry is obvious.

ARTICLE CONTINUES AFTER ADVERTISING

Funny enough, New York and California could use this source as natural gas remains their main source of electricity.

Indeed, the "resistance to gas" is not as strong as she had stated: the EIA sees the total US gas demand (not counting exports) increase by about 20% until in the last year of its projection (2050).