Sustained low natural gas prices and evolving global supply dynamics are pushing natural gas industry players to innovate and find flexible solutions to meet market needs. The newly released 2017 Strategic Directions: Natural Gas Industry Report by Black & Veatch examines how organizations 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.

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 centers in Asia, Latin America, India and Sub-Saharan Africa.  

“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 report emphasizes 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 include:

• 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 percent 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.

• Survey results show that the industry sees building pipelines (32 percent) and investing in LNG (27 percent) as the most critical investments for growth.

• Nearly one-third of respondents (27 percent) are planning to balance new renewable energy with gas resources.  

• Less than one-third of respondents (32 percent) are using data to manage risk, with other key management functions like budgeting, strategic planning and daily operations even less reliant on data (30 percent).

• Impending final rules from the U.S. Pipeline and Hazardous Materials Safety Administration (PHMSA) could make business more difficult and increase costs for customers, according to 44 percent of natural gas storage operators.

The report also analyzes how natural gas providers are focusing on finding operational efficiencies, divesting non-core assets and comprehensively strengthening their organizational foundations to remain competitive. Organizations such as storage operators are also implementing varied strategies to cope with a changing regulatory landscape.

“Those who do not commit to optimizing internal processes now, or see the bigger global picture in terms of where the market is headed, risk being unable to capitalize on big opportunities down the road,” added Cheong.

Editor’s Notes:

• Black & Veatch’s report is based on a survey of 338 qualified utility, municipal, commercial and community stakeholders.

• The full Black & Veatch report is available for free download at http://www.bv.com/reports.

About Black & Veatch
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