NextDecade today issued a Market Fundamentals Update and Webcast, focused on the global LNG and Texas oil and gas markets. The analysis included in today’s update confirms the need for more global LNG capacity and the resilience of Texas gas supply.
The presentation and corresponding webcast, hosted by three members of the NextDecade team, follow fundamentals work previously released in June 2020, in which NextDecade offered its long-term projections for Texas dry gas supply through 2030. Since that time, the Texas oil and gas markets have continued to evolve. The presentation issued today reviews how NextDecade’s projections have compared to actuals, and also closely examines global LNG market fundamentals and the significant role that reliable, clean-burning U.S. natural gas plays in facilitating a low-carbon future.
In a review of the Texas gas markets, we reiterate the depth of economic natural gas resource available in the Permian Basin and Eagle Ford Shale that will provide ample feedgas supply to NextDecade’s Rio Grande LNG facility. These basins are home to the highest concentration of rigs operated by the industry’s leading companies, including supermajors and large independents. In the presentation, we highlight producer strategies focused on the pursuit of premium drilling, industry consolidation trends and impacts, and the implications of large drilled but uncompleted (DUC) well inventories in the State of Texas. Our Texas gas supply forecast issued in June 2020 remains intact and confirms the need for incremental LNG export capacity on the Texas Gulf Coast so that producers may address limited domestic demand for their gas and growing environmental sensitivities around flaring and methane release.
In the global LNG section of today’s Market Fundamentals presentation and webcast, we highlight that existing global liquefaction capacity is not sufficient to balance the market. The global LNG market requires at least 84 mtpa of new liquefaction capacity to achieve a final investment decision (FID) to offset an expected supply shortfall by 2025. The market is expected to tighten in the coming years, with LNG prices increasing and demand exceeding supply beginning in 2022. Governments and companies around the world are prioritizing emissions reduction and an increasing role of natural gas in enabling the transition to a low-carbon future. Global LNG demand will continue to rise and new projects must sell LNG based on pricing more reflective of delivered markets to meet the evolving needs of customers around the world. In support of this shifting dynamic, NextDecade is pleased to be engaged with a significant number of prospective customers that reflect the global nature of the LNG business. Our commercial offerings are designed to meet both the needs of a global LNG customer and the U.S. producers who are keen to gain reliable, long-term access to the international marketplace.
We hope you will take a look at the Market Fundamentals presentation and listen to the corresponding webcast. Thank you for your attention and for your interest in NextDecade.