How $121B U.S. natural gas projects may impact Texas

TEXAS – A new study from the University of Texas’ Center for Energy Economics found 144 natural gas-intensive industrial projects on the drawing board for the United States that could be built by the end of the decade.

Taken together, the projects could total $121 billion in investment and add 26 billion cubic feet per day of natural gas demand.

The Texas projections are significantly higher than what the U.S. Energy Information Administration has predicted.

The sudden surge of major projects is a direct result of the shale gas revolution. Flush with cheap gas, major plastics and fertilizer companies are rushing to build new facilities that use natural gas as a feedstock for their products.

Many of the facilities — such as ExxonMobil’s ethane cracker in Houston and BASF’s ammonia plant in Freeport — will be constructed near the Gulf Coast to take advantage of cheap gas and existing industrial infrastructure. As of July 2014, natural gas prices are at a six-month low, falling to $4.22 per million Btu (MMBtu).

More importantly, natural gas futures remain steady. Contracts as far out as 2017 are priced below $5/MMBtu, an indication that the shale revolution will continue to churn out record levels of natural gas even as the country consumes more of it.

The 19 to 31 percent increase in natural gas demand could significantly affect prices. If prices rise much more than anticipated, many of the planned industrial projects could be unprofitable.

Read more at OilPrice.