North American Gas Market: Outlook to 2030

  • ID: 4457569
  • Report
  • Region: North America, United States
  • McKinsey Energy Insights
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Exports Account for ~67% of US and Canadian Demand Growth by 2030

Demand is expected to grow at a moderate rate of ~2% p.a. through 2030, eventually reaching 119 Bcfd due to increasing exports, shifts in power sources and rising chemicals production.

Combining deep insights with data from several proprietary forecasting models, this outlook explores the key drivers impacting North American gas markets.

New pipelines will allow Appalachian gas to supply new markets, fundamentally altering North American gas flows. Associated gas from the Permian will add low cost gas to the supply mix but requires additional pipeline investment. International factors like LNG and exports to Mexico will increasingly affect the US market. Weak global LNG prices and high cash costs will keep utilization at US LNG plants low for the next few years. Meanwhile, coal retirements and falling renewable costs are changing the role of gas in the power mix.

Key Findings

1. Exports account for ~67% of US and Canadian demand growth by 2030
From 2016 to 2030, LNG and exports to Mexico grow by over 19 bcfd and account for ~67% of US and Canadian gas demand growth

2. US LNG liquefaction facilities utilization will average less than 60% from 2018-2023
Weak global LNG market will result in ~4.5 bcfd excess LNG export capacity in 2021

3. From 2025 to 2030, an additional ~6 bcfd LNG export capacity comes online
Brownfield conversions at Lake Charles and Golden Pass come online first followed by more speculative projects

4. Shale will continue to dominate production
~40% of all gas produced in North America will come from the Appalachian basin by 2030

5. Low cost associated gas will push the gas cost curve to the right
~50% of total gas supply growth in North America by 2030 is associated, with the Permian and SCOOP/STACK plays especially productive

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Historical recap (2005-2016)

A review of the how the rise of shale gas has changed North American supply, demand, pipeline flows and prices

Key charts and tables:

  • North American gas demand by sector and Henry Hub price
  • US dry gas production by type
  • Comparison of historical distillate, residual fuel oil, natural gas, and coal prices
  • Major movements of piped gas across North America
  • Current key supply and demand drivers for North American gas prices

Demand outlook to 2030

Analysis examining sector-specific demand with deep dives focusing on LNG exports, gas-renewable competition in the power sector, industrial demand as well as exports to Mexico

Key charts and tables:

  • North American gas demand by sector (2016-2030)
  • North American gas demand growth by sector (2016-2030)
  • Global LNG supply and demand to 2030
  • US LNG capacity and demand outlook
  • Natural gas supply and demand by sector
  • Power generation by fuel type
  • Electric gross generation forecast in North America
  • Industrial demand by sub-sector

Supply outlook to 2030

Includes a detailed production forecast and breakeven costs by sub-play with additional analysis on how midstream elements will impact Appalachian and Permian production

Key charts and tables:

  • North American half-cycle breakeven price curve
  • North American gas production by type
  • Historical North American shale gas production by formation
  • North American shale gas production outlook by formation
  • Oil and gas production in North American oil basins
  • North American gas supply growth by oil and gas basin

Price outlook to 2030

High-level discussion of future gas price trends and implications on how gas will flow in the future

Key charts and tables:

  • Potential impact of key factors on gas price and gas price setting mechanism in the near-, mid-, and long-term
  • Natural gas flow changes (2016-2025)
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