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Continued Midstream Infrastructure Development Expected After Market Rebound

1/18/2021

The INGAA Foundation released its report North American Midstream Infrastructure – A Near Term Update Through 2025, which shows the oil and gas markets should rebound and lead to further midstream infrastructure development.

Tony Straquadine Jr.

This report, developed for the Foundation by ICF, a global consulting and digital services provider, examines how the COVID-19 pandemic has affected oil and gas markets and midstream infrastructure, and how those impacts will ease over the next five years.

As the effects of the pandemic subside, ICF’s analysis indicates that markets will rebound as demand returns. Domestic natural gas use is expected to rise to an average of roughly 87.5 billion cubic feet per day in 2025 (about 3.6 percent above the 2019 level). Exports are expected to increase again as well, especially through pipelines to Mexico and LNG terminals serving world markets, prompting further infrastructure development.

“The pandemic has no doubt slowed the pace of infrastructure development as demand for natural gas and oil were impacted globally, but this report shows that will change as markets rebound,” said Tony Straquadine Jr., executive director of the INGAA Foundation. “The industry is well-positioned to respond to the needs and challenges outlined in this report as domestic demand and export capacity return to the trajectory we saw entering 2020.”

Key findings of the report include:

Potential for infrastructure development is still significant, despite recent events, with significant additional natural gas capacity expected to be placed into service through major pipeline projects announced for 2020 through 2025.
Gas infrastructure development continues to support the transition away from coal for power
Gas Infrastructure will continue to support power system reliability as renewable power generation expands
Natural gas is still a highly desired and cost-effective source of energy for space heating, water heating, cooking, and industrial
Significant increases in exports of oil, gas (LNG and pipeline exports to Mexico), and NGLs will provide strong support for oil and gas
Infrastructure development is swinging to the Permian and Haynesville areas with associated gas development continuing to lead the way for domestic gas
Pipeline safety investments will continue to be an important focus for the foreseeable future following the recent adoption of extensive new PHMSA regulations and the PIPES Act of 2020

While permitting new infrastructure remains challenging, new demand-driven capacity is economically justified, even considering the strong headwinds created by COVID-19, the report concludes. The full copy of this report can be downloaded from the INGAA Foundation’s website: https://www.ingaa.org/Foundation.aspx.