INGAA Foundation forecasts oil, gas infrastructure outlays to 2035

An estimated $640.9 billion, or an average $29.1 billion/year, will need to be spent on US and Canadian midstream crude oil, natural gas, and natural gas liquids infrastructure from 2014 through 2035, the INGAA Foundation forecasts in a recent study.

The report, North American Midstream Infrastructure Through 2035: Capitalizing on Our Energy Abundance, also forecasts that natural gas midstream investments in the two countries will need to total $313.1 billion over the 22-year period, or an average $14.2 billion/year.

Another $56 billion, or $2.5 billion/year, will be required for NGL pipeline, pumping, fractionation, and export facilities, it indicated. Meanwhile, $271.8 billion, or $12.4 billion/year, will be needed for crude oil gathering lines, lease equipment, mainline pipeline and pumping, storage laterals, and storage tanks.

The study, which ICF International prepared at the foundation’s request, predicted real natural gas prices would rise from $4/MMBtu to $6-7/MMBtu through 2035. Gas consumption is projected to increase 1.2%/year as LNG exports add to more domestic demand growth for power generation and manufacturing, it said.

The nearly $641 billion of total midstream investment will create more than 432,000 jobs, add $885 billion to US and Canadian economies, and bring in more than $300 billion in federal, state or provincial, and local taxes, according to the report.

It was the seventh such forecast by the foundation, which the Interstate Natural Gas Association of America formed in 1999 to facilitate the construction and safe operation of North American gas pipelines and promote gas infrastructure development worldwide. The forecast was broadened in 2011 to include gas liquids and crude oil pipelines.

Breaking new ground

“While the INGAA Foundation has done its flagship gas infrastructure reports for more than 20 years, the last two reports have broken new ground by recognizing the importance of including NGL and crude oil infrastructure to provide a broader perspective on how prices and production of the three commodities can affect the market and infrastructure development,” INGAA Pres. Donald F. Santa said.

“It’s going to be challenging, particularly with so much front-loading,” Santa told reporters, adding, “But based on what we’ve had to do in the past, we’re confident we can do it.”

INGAA Foundation Pres. Craig Meier, who also is president of Sunland Construction Inc. in Eunice, La., said, “This shows there are opportunities out there for all of us. The biggest changes are the plays and how close they are to markets, particularly the Marcellus and Utica shales.” Infrastructure construction will affect local and regional economies as more people go to work, he added.

Rapid market transition makes it more urgent to get oil and gas to market, observed Martin J. Durbin, president of America’s Natural Gas Alliance, which cosponsored the study. He said its completion is well-timed since the US Department of Energy is preparing to start its first quadrennial energy review.

“The situation in Ukraine has elevated the perception in this country that [the US] could be more of a global market player,” Durbin said, adding, “We’re not going to solve Ukraine’s problems tomorrow. But we can send a very strong signal to the world that we intend to become more active in the markets. That could create pressure to authorize more US LNG exports.”

The study said US and Canadian expenditures during 2014-35 would total $43.7 billion ($14.2 billion/year) for LNG export facilities and $5.9 billion ($300 million/year) for NGL export installations.

Driven by markets

Kevin Petak, an ICF vice-president who helped prepare the report, said the projections did not try to anticipate regulatory developments. “We tried to calculate global LNG market growth, then factor in competition from North America relative to Africa and elsewhere,” he explained.

“On that basis, about 20% of the global market growth will come from North America,” Petak said. “The same is true of NGLs. It’s the market, not regulation, that we think will drive this.”

Santa noted that those who have incentives to reduce supply constraints will likely pay for this additional infrastructure. “It could be a supply hub trying to remove a bottleneck, a local distributor trying to ensure steady supplies, or a producer wanting to get its oil and gas to market,” he said.

It also will be critical to align pipeline capacity addition incentives with demand for more gas to generate power, INGAA’s president added.

Durbin said, “Some policy changes will be needed, particularly in New England, where new ways may be needed to raise capital. I don’t want to see us get stuck trying to build that last mile of pipeline to manufacturers and consumers. I hope all the necessary people will be able to work together.”

Contact Nick Snow at

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