Note from Bofa Research - bullish for natural gas demand
Posted: Tue Sep 28, 2021 2:50 pm
Increasing LNG exports intensify demand for US nat gas
Increasing US LNG export capacity will be a key driver for US natural gas demand. For
instance, we see the potential for 10 Bcf/d of incremental demand pull from US LNG
export demand over the next 5+ years, effectively taking US LNG export capacity to
about 20 Bcf/d (152 MTPA) during the back half of this decade. As a result, residue gas
supply could grow by 13-15 Bcf/d over the next 5 years, led by Permian basin growth of
6+ Bcf/d and still solid growth of 3-4 Bcf/d in both the Northeast & Haynesville,
meaning more capacity will be needed across these basins, except for maybe the
Haynesville if the more than 5.5 Bcf/d of proposed capacity is actually built.
Broad gas production growth vs centralized oil growth
While we expect producer discipline and increasing OPEC+ competition to drive more
measured oil production growth this cycle, we still do expect oil, nat gas & NGLs to all
grow by 4-6% p.a. over the next 3-4 yrs. However, we think the only US oil basin to
exhibit meaningful growth will be the Permian. Unlike oil, we forecast all three major gas
producing basins – Northeast, Permian & Haynesville – to grow meaningfully over the
next few yrs, likely leading to infrastructure constraints in the Permian first (late 2023/1H24).
Increasing US LNG export capacity will be a key driver for US natural gas demand. For
instance, we see the potential for 10 Bcf/d of incremental demand pull from US LNG
export demand over the next 5+ years, effectively taking US LNG export capacity to
about 20 Bcf/d (152 MTPA) during the back half of this decade. As a result, residue gas
supply could grow by 13-15 Bcf/d over the next 5 years, led by Permian basin growth of
6+ Bcf/d and still solid growth of 3-4 Bcf/d in both the Northeast & Haynesville,
meaning more capacity will be needed across these basins, except for maybe the
Haynesville if the more than 5.5 Bcf/d of proposed capacity is actually built.
Broad gas production growth vs centralized oil growth
While we expect producer discipline and increasing OPEC+ competition to drive more
measured oil production growth this cycle, we still do expect oil, nat gas & NGLs to all
grow by 4-6% p.a. over the next 3-4 yrs. However, we think the only US oil basin to
exhibit meaningful growth will be the Permian. Unlike oil, we forecast all three major gas
producing basins – Northeast, Permian & Haynesville – to grow meaningfully over the
next few yrs, likely leading to infrastructure constraints in the Permian first (late 2023/1H24).