Originally published for customers July 22, 2022.
What’s the issue?
In a research report issued to clients earlier this week, Goldman Sachs noted that after incorporating the European Union’s goal of reducing Russian gas imports by two-thirds by the end of this year and eliminating them entirely by 2030, the EU and the United Kingdom may likely need up to an additional “40 Mtpa of 15-yr LNG contracts to improve security and diversification of supply . . . and potentially up to another 50 Mtpa of 10-yr LNG contracts.”
Why does it matter?
The U.S. LNG producers will likely be a key component of meeting this need and the vast majority of projects in the U.S. are all located along the Gulf Coast in Louisiana and Texas. While those projects often include a pipeline that connects the LNG terminal to the interstate pipeline system, they are often not paired with pipeline projects reaching all the way back to supply basins.
What’s our view?
Comparing the capacity of the interstate pipelines in the region with the potential demand from these LNG terminals shows that in the coming decade there is likely to be a substantial need for additional long-haul capacity to meet not only the actual demand but also to provide the purchasers of gas with the type of optionality that they seek.
Want the full article? We'll email it to you.