Natural gas, oil and natural gas liquids (NGL) midstream infrastructure development in the United States and Canada will continue at a significant pace through 2035, with an average $44 billion investment needed each year, according to a report released Monday by the Interstate Natural Gas Association of America's (INGAA) INGAA Foundation.
"Continued production growth, combined with growing consumption -- particularly for natural gas -- will drive the need for expanded pipeline capacity to supply energy consumers in both domestic and export markets," said Don Santa, president of the INGAA Foundation.
The report, "North American Midstream Infrastructure through 2035: Significant Development Continues,” found that natural gas infrastructure, including gathering and transmission pipelines, storage and liquefied natural gas export facilities, will make up more than half of the needed energy infrastructure, with total investments forecast at over $417 billion through 2035.
"Low natural gas prices have fostered growth in the power generation market as coal and nuclear plants continue to be retired across the U.S.," according to the INGAA Foundation. "This trend seems irreversible, considering regulations that encourage clean power and the way in which natural gas complements renewables."
Meanwhile, $321 billion of oil infrastructure, including pipelines, lease equipment and storage tanks, and $53 billion of new NGL infrastructure are forecast in the next 18 years.
Over the course of the projections, about 41,000 miles of pipeline and 7 million horsepower of compression and pumping are expected to be added to transport natural gas, oil and NGLs. In addition, 139,000 miles of gathering lines are forecast to be built, with another 10 million horsepower of compression and pumping to support gathering, processing and storage.
The report was conducted by ICF on behalf of the INGAA Foundation to update a 2016 infrastructure report.
Not weighed into ICF's calculations are the potential impact of tariffs on steel and aluminum imports recently announced by the Trump administration. But the conclusions of a 2017 ICF report, compiled in the wake of President Trump's call for the use of American steel in pipeline construction, "could easily be translated into the impact of the tariffs," said Kevin Petak, ICF vice president.
"A lot of that is because of the fact that this is a niche market, a specialty product, some of those grades of steel are simply not available within the United States," Petak said. "So I think there is the potential that the steel tariffs -- and of course this has been a shifting saga seemingly week to week -- but that it could have a negative impact on the industry and on the ability to expand. If nothing else, it has introduced a significant element of uncertainty."
The projected midstream investments will contribute about $70 billion to the U.S. and Canadian economies annually and result in average employment of about 725,000 workers each year in the United States, according to the report.
The analysts assumed U.S. gross domestic product growing at 2.1% annually through the forecast period, with U.S. industrial production growing at 1.5% per year, Henry Hub natural gas prices averaging about $3.30/MMBtu in 2016 dollars and West Texas Intermediate crude prices averaging $75/bbl.