Yemisi Izuora.
A new report has identified that sustained low natural gas prices and evolving global supply dynamics are pushing natural gas players to innovate and find flexible solutions to meet market needs.
A newly released report by EPC firm Black & Veatch, 2017 Strategic Directions: Natural Gas Industry Report, examines how organisations are planning for long-term, sustainable operations that can accommodate rising supplies and deliver them to markets eager to use natural gas as a cheaper and cleaner power generation source.
The EPC firm explained that key report findings reflect the growing role of the liquefied natural gas (LNG) trade in shifting oversupply from countries like the United States to growing demand centres in Sub-Saharan Africa, Asia, Latin America and India.
“Global LNG activity is impacted by a number of factors including foreign relations, emerging production leaders and available infrastructure,” said Hoe Wai Cheong, President of Black & Veatch’s oil & gas business.
“Some of these issues may be perceived as challenges, but many industry leaders are now keeping a close watch on international events to proactively map out future business opportunities.”
The US-headquartered EPC added: “The report emphasises calls from the industry to fund the infrastructure investments that will be pivotal to accommodating increased LNG imports and exports, including floating LNG (FLNG) applications and natural gas-based combined-cycle plants.”
“Production efficiencies made in recent years have stoked a steady increase in global supply,” said John Chevrette, President of Black & Veatch management consulting.
“However, the ability of emerging markets to absorb this supply, given the lack of terminals, pipelines and other infrastructure, will require collaboration with end users and gas-to-power integration experts.”
Other key findings indicate that one of the most dramatic swings from previous years’ surveys is the expectation for sustained lower global crude oil prices between now and 2020. Nearly half of the industry respondents now expect prices to only be between $40 and $50 per barrel. In the 2016 report, merely 7 per cent listed this price range as their expectation. Oil and gas prices have historically been indexed in many markets, signaling a shift in survey respondents’ outlook for the industry.
Also, survey results show that the industry sees building pipelines 32 per cent and investing in LNG 27 per cent as the most critical investments for growth.
The report also analyses how natural gas providers are focusing on finding operational efficiencies, divesting non-core assets and comprehensively strengthening their organisational foundations to remain competitive.
Organisations such as storage operators are also implementing varied strategies to cope with a changing regulatory landscape.
“Those who do not commit to optimising internal processes now, or see the bigger global picture in terms of where the market is headed, risk being unable to capitalise on big opportunities down the road,” added Cheong.