GAIL plans 47 km pilot project for natural gas transmission
Gas Authority of India Ltd (GAIL), a state-run natural gas transmission company, has decided to launch a pilot project covering 47 km in Siliguri. Today, GAIL officials met mayor Goutam Deb and other representatives, including the commissioner of the Siliguri Municipal Corporation, to seek permission for laying micro-pipelines for the distribution of natural gas for both commercial and domestic purposes. Mayor Goutam Deb has given in-principle approval to the project, enabling Siliguri residents to benefit from the initiative. Speaking to reporters, Mr Deb stated that the state government and the Public Works Department (PWD) had prepared a standard operating procedure (SOP) for implementing the natural gas transmission system for GAIL in Kolkata. He added, “We will follow the same SOP to implement the pilot project here.
The Future of U.S. LNG: Growth, Delays, and Uncertainty
The U.S. is currently the world’s largest LNG exporter, but future growth is threatened by legal challenges, project delays, and a pause on new export permits. The outcome of the 2024 U.S. presidential election could significantly impact the future of U.S. LNG policy and export potential. Industry leaders are calling for an end to the permitting pause and streamlined regulations to support continued growth in the U.S. LNG sector. The U.S. LNG export industry has recently hit several stumbling blocks. And who will be America’s president in the next four years may not even be the biggest. Litigation at court from environmental groups, a contractor bankruptcy, and President Joe Biden’s permit pause have combined to increase uncertainty for U.S. LNG project developers and exporters this decade. Top LNG Exporter The expansion of the LNG export infrastructure over the past five years and the flexibility in cargo destination of U.S. LNG have made America the world’s biggest exporter of liquefied natural gas. Soaring sales in Europe, which has scrambled to replace Russian pipeline gas, and more LNG projects coming online this decade boosted U.S. exports by 12% in 2023 from a year earlier. At 11.9 billion cubic feet per day (Bcf/d) of LNG exports, the United States easily beat its closest rivals – Qatar and Australia – to become the biggest LNG exporter last year, EIA data showed. Utilization of U.S. LNG export capacity averaged 104% of nominal capacity and 86% of peak capacity across the seven U.S. LNG terminals operating in 2023 as relatively strong demand for LNG in Europe amid high international natural gas prices supported increased U.S. LNG exports last year. This year, U.S. LNG exports are set to average 12.1 billion Bcf/d, slightly up from 2023, and 13.8 Bcf/d in 2025, per the EIA’s latest Short-Term Energy Outlook for October. Two new projects, Corpus Christi LNG Stage 3 and Plaquemines LNG, are in the commissioning phase to start LNG export operations, and each of these facilities will begin exporting LNG by the end of 2024, the EIA said.
Gas Prices Set for a Breakout in 2025
Natural gas prices are on the climb and this climb is about to intensify in the first months of the new year as seasonal demand hits its peak in the northern hemisphere. That’s bad news for struggling economies. Gas prices in Europe, Asia, and North America have made solid gains this year. Reuters’ Gavin Maguire reported this week those fall in the range between 30% and 50%–and that’s not the end of the rally. Winter is just beginning, and the weather in Europe and Asia, as well as most of North America, is about to get a lot colder. Energy market analyst John Kemp reported that speculators in the United States were covering their short bets on natural gas at the fastest rate in over a year, reinforcing expectations of stronger gas prices. What’s more, these bets are being made just when the Energy Information Administration reported that the U.S. is entering winter with abundant natural gas reserves: the highest level since 2016, in fact. Yet even this fact, with gas in storage at over 3.9 trillion cu ft, has not been enough to maintain speculators’ bearish mood. In addition to the seasonal rebound and demand—and the expectation that it will be one major rebound after two warm winters—one driver behind this change in sentiment is the outlook for production. The focus here is on the United States and the fact that gas producers have been curbing production because of the chronically depressed prices. Now that prices are improving, it will be a while before the industry responds with a production boost—and until then, prices will be trending higher. So will power generation costs for most of the key markets. Europe will continue to be a major driver of natural gas demand in the coming months. Winter is not the top performance season for wind and solar, as recently evidenced by the energy mix of Germany, which featured coal as its biggest generator, followed by natural gas, and wind a close second to gas. Yet the gas that Europe is using to generate power is the same gas that much of Asia has come to rely on for its winter needs: U.S. liquefied natural gas. This means we have another tight race for limited LNG supply this winter. China provided some easing of that tightness this week when it completed the final connection of Russia’s Power of Siberia gas pipeline to end consumers, which would allow the pipe to reach its full capacity next year, covering 9% of the country’s gas demand. That’s 38 billion cu m that China won’t be looking to buy on the LNG spot market, and this is good news for other Asian countries—if they can outbid the Europeans. This will be tough, and the Europeans will most likely get more gas than Asian nations this winter, as they did back in 2022. This means two things: that Asian nations will fall back on coal once again and that Europeans’ electricity bills will rise once again, as will the price of everything that features electricity in its input costs. It is a tricky time for yet more consumer price inflation in Europe as people’s disgruntlement with the cost of living intensifies, but there is no chance of avoiding that disgruntlement. Europe doesn’t have a lot of options when it comes to gas supply. And U.S. producers are yet to start ramping up output as prices reverse their decline. This is perhaps the toughest stage in the energy commodity cycle for consumers. Supply is tightening because of a past surplus that drove prices down, prompting the production curbs. At the same time, as fate and the Earth’s rotation around the Sun would have it, demand is on the way to its annual peak, aggravating the imbalance with supply and set to cause some serious pain for consumers. The data on gas withdrawals and injection into storage in Europe is enough to paint a picture that U.S. gas producers would enjoy, unlike European governments and other large buyers. In Germany, withdrawals on Tuesday stood at 942 GWh, while injections totaled 16.22 GWh. For France, the withdrawal figure was 930.7 GWh, while the injection figure stood at 96.50 GWh. Italy and the Netherlands also saw massive withdrawals compared to the injection of new gas into storage. The situation points to looming depletion unless winter temperatures let go smack in the middle of the season to give Europe a breather. Yet the weather is notoriously unreliable when it comes to survival—and to energy security as the countries at the forefront of the energy transition are discovering for yet another winter. The looming gas shortage might give decision-makers in those countries pause for reconsideration of priorities, with energy security coming on top of emission levels. On the other hand, this has happened before, and it has not led to changes in priorities, so the chances of things changing now are slim.