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McKinsey launches 2019 North American Gas Outlook

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LNG Industry,

McKinsey Energy Insights has launched its 2019 North American Gas Outlook.

The report reveals US gas economics will reach below US$3/million btu in the next 10 years due to ample supply, which will support North American gas exports and unlock further demand growth domestically.

North American gas demand will reach 125 billion ft3/d by 2030 from 95 billion ft3/d today, with 20 billion ft3/d of growth coming from gas and LNG exports. The share of gas in the power mix will grow by 5 billion ft3/d – driven by coal retirements – but renewables will start to displace gas post-2025 as part of the power sector’s decarbonisation.

“North America is endowed with abundant gas resources, which will play a major role in the energy mix domestically and provide security of supply through LNG exports to Europe and Asia” said Dumitru Dediu, Partner at McKinsey. “We see over 1000 trillion ft3 of gas resources – which is sufficient to meet demand for the next two decades – at cost economics well below US$3/million btu.”

In terms of supply, Appalachia will increase production to approximately 55 billion ft3/d and will supply approximately 40% of the North American market by 2030. As a result, Appalachian gas production is expected to displace the Western Canadian Sedimentary Basin and Rockies in the Midwest and will supply the southern mid-Atlantic region. The building of pipeline infrastructure post-2023 will ensure Appalachian supply will continue to grow and limit price fly-up potential.

Associated gas, primarily from the Permian basin, is expected to increase production by approximately 12 billion ft3/d and supply 25% of the North American market by 2030. Permian production will limit Appalachian flows South and will help meet US Gulf Coast demand for global LNG exports.

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