US Gas Production Set To Fall On Lack Of Pipelines
April 8, 2022 | Tags: ZEROHEDGEUS Gas Production Set To Fall On Lack Of Pipelines
By Charles Kennedy of OilPrice.com
U.S. natural gas production will decline by 5 percent by 2050, and consumption will shed 4 percent if no new interstate pipelines are built, the Energy Information Administration said in its latest Annual Energy Outlook.
This, in turn, will lead to higher gas prices, the authority also said, and this will, in turn, lead to higher electricity prices.
“The higher natural gas prices that result from capacity constraints primarily affect natural gas consumption in the U.S. electric power sector, which is more price-sensitive than the residential, commercial, and industrial sectors,” the EIA explained.
The share of natural gas in power generation is set to decline in the scenario of no new interstate natural gas pipelines but not by much. According to the EIA, in that scenario, the share of gas in 2050 will constitute 31 percent of the total, compared with 34 percent under the agency’s reference scenario.
Yet, in absolute terms, the lack of new interstate gas pipelines will reduce gas-fired power generation by 11 percent in 2050 compared to the reference scenario.
At the same time, any bans on new interstate pipelines—a prerogative of the federal government—will not lead to any significant carbon dioxide emission declines.
“We project that restricting interstate U.S. natural gas pipeline capacity would only slightly lower energy-related carbon dioxide (CO2) emissions in the United States relative to the Reference case,” the EIA wrote.
“Total CO2 from all fuel sources in 2050 are 4% lower in the No Interstate Natural Gas Pipeline Builds case than in the Reference case.”
One more thing that the EIA did not include in its report, but energy expert David Backmon raised as an issue this week in a podcast, is the link between interstate gas pipeline capacity and increased U.S. LNG exports to Europe, per President Biden’s commitment to Brussels to make up for a solid portion of Russian gas. Without more pipelines, Blackmon argued, U.S. LNG producers would find it difficult to boost exports sufficiently.