In Covid Economy, More Uncertainty for Gas

July 7, 2020

Above, Jessica Woycehoski is a resource planner for CMS Energy, Michigan’s largest utility and the 10th largest in the US. Problems for natural gas were becoming evident even 2 years ago when I interviewed her.

Natural Gas in the age of Covid-19 is looking more and more like coal did about a dozen years ago – that is, what was once considered a slam dunk no-brainer for additions to the grid, now reveals glaring weaknesses and contradictions.

I posted yesterday about a cancelled gas pipeline on the East Coast – that developers attributed to increasing uncertainty in the gas world.
I’ll continue to post the bread crumbs that lead me to believe we are seeing an unraveling of natural gas, about a decade sooner than even optimistic renewable fans might have predicted.

Fundamental quandary: Gas is and has been, for a decade, too cheap for frackers to make money. If they start charging enough to make a profit, the renewables, and increasingly, battery storage, will eat them alive.
Any new developments that add more layers of doubt just make investors more skittish.

Stay tuned.

Reuters:

LONDON (Reuters) – Prospects for nearly half of the world’s projects to build infrastructure for exporting liquefied natural gas have faltered in recent months, amid rising concerns about climate change, public protests and delays due to the coronavirus pandemic, according to a report published Tuesday.

Out of 45 major LNG export projects in pre-construction development globally, at least 20 – representing a capital outlay of some $292 billion – are now facing delays to their financing, researchers at Global Energy Monitor found. 

That marks a stark shift by investors away from what many had considered a promising fuel market, already buffeted by slower growth in demand, rising competition from renewable energy technologies and opposition over the industry’s climate-warming emissions. 

The vice president of the European Investment Bank said the report underlined the unacceptable risk of investing in LNG assets.

“Investing in new fossil fuel infrastructure like liquefied natural gas (LNG) terminals is increasingly an economically unsound decision,” Andrew McDowell told Reuters in an email. 

The bank had announced in November that it would stop financing fossil fuel projects at the end of 2021. 

The LNG industry has made big bets on a more positive outlook, as many analysts have predicted that demand would outstrip supply sometime in the next decade. 

Companies committed $160 billion to $170 billion to new LNG export terminal construction around the world in 2019, almost triple the roughly $65 billion committed in 2018, said researchers at the San Francisco-based non-profit research group.

In total, companies had announced plans to build $758 billion of projects that are as yet in the pre-construction phase. But with 20 projects now in jeopardy, including nine in the United States, that planned capital outlay could be reduced by $292 billion, or 38%, if the delays persist indefinitely, the researchers told Reuters. 

“LNG infrastructure faces the risk of becoming stranded assets and should be avoided,” said Erik Fransson, head of the fund department at the Swedish Pensions Agency, which has $12 billion of assets under management.

3 Responses to “In Covid Economy, More Uncertainty for Gas”

  1. dumboldguy Says:

    Goody, Goody—-Semper Fi, and OOH-rah! Bad news for NG is good news for the planet.

    Of course, we have been hearing similar “bad news” about COAL for a long time. If NG is pushed out at the rate COAL has been, does anyone think we’ll avoid the looming tipping points and resulting CAGW?

  2. leslie graham Says:

    Warren Buffet thinks gas has a great future. Not that he’s a hero of mine or anything but he has become one of the top five richest men in the world solely by predicting future trends.

    https://www.barrons.com/articles/warren-buffett-buys-dominion-energys-natural-gas-storage-assets-51593980905

    We seem to be on course for extinction of the human race (and every other higher life form) but at least there are some great opportunities to get rick before we all die. Yay!

  3. rhymeswithgoalie Says:

    How many houses and buildings in the US are plumbed for gas appliances (heating, stoves, ovens, water heaters, etc.)? What kind of load would it transfer to the power grid for all homes heated with gas-fired heaters to convert to electric-powered?


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