By Mella McEwen
Midland Reporter-Telegram, Jan. 6, 2023
As 2023 gets underway, the Energy Information Administration is offering its annual short-term energy outlook for the early part of the year.
Among the trends the report has identified are rising natural gas production, increasing liquefied natural gas exports and high winter electricity prices.
So, asked the Texas Independent Producers and Royalty Owners Association, what does this mean for Texas?
“Global production will continue to rise in the coming years and the Permian Basin will play a critical role in meeting energy demand here and abroad,” responded Ed Longanecker, TIPRO president, in an email to the Reporter-Telegram.
Rising natural gas production is an important trend the agency identified, forecasting output will grow 2% more than in 2022. In both 2023 and 2022, growth was about 10% more than pandemic levels. The major driver of the nation’s natural gas output are the Haynesville and the Permian.
While raising its forecast for domestic natural gas production, the EIA said it expects Permian Basin production to be limited early in the year by lack of pipeline capacity to bring gas associated with crude production to market. Those constraints are expected to be resolved earlier than the EIA previously assumed, which will also contribute to slightly more crude oil production in 2023 than previously assumed.
Because pipeline expansion projects will play a major role in increasing output, Longanecker wrote it is important for lawmakers and regulators alike to support expanding the nation’s pipeline system to keep track with progress.
“The EIA recognized this notion, stating, ‘The pace at which these projects are completed is a notable uncertainty in our forecast, and delays could result in lower production than we expect,’” wrote Longanecker.
The EIA pointed out that inadequate infrastructure is keeping winter energy prices high, particularly in the Northeast.
Another important trend identified by the EIA is the rise in natural gas exports, stemming from a continued rise in exports and rising demand from regions like Europe that had previously relied on Russian supplies, according to Longanecker. The EIA expects a stronger year for the natural gas industry, with the Freeport LNG facility approaching operational levels seen before a fire at the facility by March.
“Additionally, to meet the high demand for natural gas in Europe and Asia, U.S. facilities will continue to operate near maximum capacity. Combine these factors, and the EIA expects U.S. LNG exports, most of which comes from Texas, to break new records by March 2023,” the EIA wrote in its outlook.
A third significant trend is the growth of renewable energy in electric generation with wind and solar power-derived electricity from 14% in 2022 to 16% in 2023 while natural gas drops from 39% to 37%.
But because renewable energy is intermittent, Longanecker noted that natural gas will be needed to provide reliability.
The key point of the outlook is that natural gas will continue to play a vital role in powering the nation, wrote Longanecker. That means, he concluded, natural gas production and LNG exports will continue to increase and additional pipeline infrastructure will be needed to ensure the US will not only have adequate resources but can provide those resources to its partners and allies.
Originally posted on the Midland Reporter-Telegram.