published Tue, February 14, 2012
EIC Consult launches US Energy Sector Report
US shale gas development – in particular liquid rich plays – are set to enjoy years of growth with production estimated to reach 30 billion cubic feet per day (Bcf/d) by 2020, according to a US energy sector report from EIC Consult, the market research and consultancy arm of the Energy Industries Council (EIC).
The report also predicts that, despite much publicized
opposition, the comprehensive or prohibitive regulation of shale
gas in the future remains unlikely, due to the number of jobs
created and taxes generated.
The EIC Consult's USA Country Overview, the most comprehensive
report on the Americas for the wider supply chain, provides 120
pages of critical analysis of contemporary developments in the US
energy sector drawing on project data from EIC DataStream, the
EIC's online database which tracks over 9,000 energy projects
worldwide. In particular, the report focuses on business
development and opportunities for UK companies.
Other key findings from the report include:
- Thatoffshore deepwater drilling in the Gulf of Mexico is likely
to regain the momentumit had, prior to the Macondo disaster.
According to the report, there are currently 5,981 active leases in
the Gulf of Mexico with over 130 new well permits since new
regulations came into effect in October 2010
- That the rise in shale gas development has led toa number of
LNG (Liquefied Natural Gas) terminals being converted from import
to export terminalsand LNG exports doubling between 2009 and 2011.
However, the report cautioned that the market for US LNG exports is
far from secure.
- Thatethanol production is likely to increasein 2012, with the
US exporting fuel ethanol for the first time. EIC DataStream
indicates that there are 42 future and active biofuel projects in
the US.
- Thatnatural gas fired plants are the most likely form of power
generation growthwith natural gas generation likely to increase by
305.81 TWh (Terawatt-Hours per Year), to 1287.62 TWh from 2010 to
2035. EIC DataStream is currently tracking 59 future and active
gas-fired power plant projects in the US, representing over US$44
billion of investment and over 43 GWe (Gigawatt-Electric) of
generating capacity
- And finally, thatsolar and wind power are leading the way in
renewable energy. While there is a need for renewable technologies
to become more competitive when compared with cheap gas, the report
predicts that renewables will have an increasingly important role
in the future US energy mix.
"In a world of rapidly rising oil prices and reduced imports,
developing domestic energy resources, diversifying energy sources
and expanding production have become major priorities for the
US",continuesPhil Goddard, Director of Consultancyand the main
author of the report.
"Whether it be shale gas, offshore exploration and production,
or renewable sources, such as wind and solar, the US energy sector
remains full of opportunities with firms at all stages of the
supply chain standing to benefit."
The report is priced at £950.00 plus VAT for EIC Members and
£1,350 plus VAT for non-Members. To purchase a copy of this report
or for further information, visit www.eic-consult.com.
Key contents include an overview of trade relations between the US
and UK; a political overview of the US including a look at the
energy policies of President Obama as compared to the lead
Republican contender, Mitt Romney; an assessment of the upstream,
midstream and downstream oil & gas sectors, as well as the
power, carbon capture & storage; and renewable energy sectors.
In addition, the report also looks at the key energy states of
Alaska, California and Texas and other important issues, such as
security of supply, import & exports, finance and taxation, and
US employment law. The report also includes an A1 sized 'US
Project Opportunities Map.
EIC Consult is the EIC's new market research and
consultancy service and one of the most comprehensive sources of
business intelligence in the energy industry today. EIC Consult
generates country overviews, sector reports, and bespoke
studies.
Key Report Highlights
Shale Gas Development Continues to Rise
According to the report, shale gas development will continue to
progress with liquid rich plays the main targets, due to low gas
prices and high oil prices. Daily production from shale gas
increased from one billion cubic feet per day (Bcf/d) in 2003, to
almost 20 Bcf/d by mid-2011 and could reach 30 Bcf/d by 2020, the
report estimates.
In the past five years alone, the innovative application of
technologies for tapping gas found in shale and other types of rock
has enabled a 20% rise in US natural gas production and restored US
gas output to levels not seen since its peak in the 1970s.
As of 2010, there were at least 22 major shale plays in the US,
spread over more than 20 states. The oil rich Bakken and Eagle Ford
plays were identified as the centre of many operators long term
shale plans with intensive drilling driving up demand for
development and production services and operators on the new look
out for new technologies to maximize well output. Despite much
publicized opposition, the report believes that the comprehensive
or prohibitive regulation of shale gas is unlikely, due to the
number of jobs created and taxes generated.
Gulf of Mexico Offshore Development Bounces Back
post-Macondo
The report also found that exploration and production in the Gulf
of Mexico is still strong with 5,981 active leases.
Specific projects cited in the report through EIC DataStream and
of interest to the UK supply chain include Shell's Cardamom oil
field, the first deepwater plan to be cleared after the Macondo
disaster; Chevron's Big Foot deepwater oil field; BP's Mad Dog oil
and gas field; Anadarko's Lucius oil and gas field where appraisal
drilling took place in July 2011; and future projects such as
ExxonMobil and Anadarko's Hadrian oil and gas field where first
production is expected to begin in 2014.
Following the new permitting regulations which came into effect
in October 2010 and which require higher standards regarding well
design, casing and cementing, over 130 new well permits have been
granted with new offshore prospects tending to be located in deep
waters of over 1,500 metres (5,000 feet). By 2009 ultra deepwater
oil production in the US in depths of over 1,500 metres had
overtaken oil production in shallow waters.
With many more applications currently under consideration, the
report predicts that offshore deepwater drilling is likely to
regain the momentum it had prior to the Macondo
disaster.
LNG Terminals - From Import to Export
The increase in shale gas development has also led to existing LNG
import terminals being converted to operate as export facilities.
By July 2011, imports were down 44% compared with the same time in
2010 with, according to Reuters, imports at the lowest monthly
level since December 2002. At the same time, however, exports
almost doubled from 33.355 Bcf (billion cubic feet) in 2009 to
64.793 Bcf in 2010 - a result of the re-exportation of LNG
imports.
The report found, however, that the future of LNG remains
uncertain as the market for US exports is far from secure.
Furthermore, the proposed export terminals are located on the East
Coast lacking a direct route to the more profitable Asian markets.
Furthermore the report stresses that, in order for US natural gas
to be competitive in the global LNG market, domestic prices are
required to remain moderately low for the 25 year life cycle of an
export project.
The report also found that natural gas storage capacity is
increasing to accommodate shale output with many new storage
facilities entering construction, with resulting opportunities for
the supply chain.
The Growth of Ethanol Production and Natural Gas Fired
Generators
- Nuclear Opportunities over the Next Few
Years
The report also predicted that ethanol production will continue
to increase and that coal will continue to remain the country's
main power source. EIC DataStream indicates that there are 42
future and active biofuel projects in the US.
In regard to power generation, new increases in generation
capacity are likely to come from natural gas fired plants, due to
falling gas costs and the possibility of a carbon tax on future
coal plants.
With around 55 GWe installed capacity, however, natural gas
units makes up 81% of the total new capacity added from 2000-2010.
EIC DataStream is currently tracking 59 future and active gas-fired
power plant projects. These represent over $44 billion of
investment and over 43 GWe of generating capacity. The report
predicts that natural gas generation will increase by 305.81 TWh to
1287.62 TWh from 2010 to 2035.
Nuclear power also looks set to experience a slight increase in
capacity, the report says. 30 new reactors applications were
submitted by early 2011 and with all final decisions on the
applications to be made between 2012 and late 2014, significant
opportunities remain in the industry. EIC DataStream is currently
tracking over 20 nuclear new build power projects, representing an
investment value of around $159 billion
Renewables - Wind and Solar Lead the Way
In regard to renewable energy, the report found that wind and solar
energy are experiencing the largest expansion in generation
capacity and new investment, although hydropower remains the single
largest source of renewable energy in the US. EIC DataStream
currently shows that over 70 commercial solar power projects as
being under development in the US and numerous wind energy projects
at all stages of development from planning to construction.
The report found that one of the key challenges for renewable
development in the US is the need for technologies to become more
cost-competitive when up against cheap gas. The report predicts,
however, that renewable energy will have an increasingly important
role in the US energy mix.
About the EIC
The EIC is the leading trade association for UK companies
supplying goods and services to the energy industries worldwide.
Established in 1943, the EIC has over 650 member companies and
provides them with the capability to understand, identify and
pursue global business opportunities. The EIC membership comprises
contractors and suppliers from all areas of the energy sector who
make a significant contribution to the UK economy, employing in
aggregate around one million and generating £100 billion in
revenues from their UK operations.
The EIC's head office is in London with regional offices in
Billingham and Aberdeen, and overseas offices in Rio de Janeiro,
Houston, Singapore, China and Dubai.
The EIC Board of 20 Directors is elected by members annually
and establishes overall policy and provides guidance and governance
to the management team.
Date: 14/02/2012