New pipelines are helping bring natural gas to customers abroad

Demand for natural gas is continuing to grow.

In the next five years, the U.S. will rapidly expand its exports of liquefied natural gas (LNG) to Europe and Asia, and data center growth is creating more need for natural-gas-powered electricity. To meet that rising demand, the U.S. needs a critical but invisible infrastructure: pipelines.

There’s a growing underground highway that gets the United States’ cheap and abundant natural gas to new customers, said Jamison Cocklin, managing editor of LNG at Natural Gas Intelligence.

“The pipeline buildout was pretty crucial to natural gas production growth as shale plays expanded across the country over the last decade or two, and right now there's kind of a renaissance of sorts because of these data centers, because of these LNG terminals that are coming online,” he said.

While data centers are often being built close to where natural gas is being produced, Matthew Piatek, director with S&P Global Energy’s Gas, Power, and Climate Solutions team, said natural gas that will be exported abroad must travel a lot further.

“Now we have that requirement for more connective tissue,” he said. “The pipeline path that enables flows to move all the way along your initial production enabling capacity… all the way to the Gulf Coast.”

That means lots of additional pipelines, said Dan Pickering, founder and chief investment officer at Pickering Energy Partners.

“Essentially what you're doing is… digging a big trench in the ground, laying massive imagined pipelines that are bigger than you can reach around in the ground and moving that over hundreds and thousands of miles,” he said.

It’s a big, long, complicated process.

“Get landowner approval, dig those trenches, get all that pipe imported and laid in the ground from one end to the other, welded it together, covered back up, so that you know the earth is as it was before,” Pickering said.

And that will continue to generate economic activity over the next several years, said Jai Singh, partner at Rystad Energy.

“Certainly lots of steel and lots of construction work, lots of welding,” he said. “They do tend to create jobs, albeit temporary.”

The long-term economic benefit is more for the producers of natural gas in places like West Texas, said Ed Hirs, an energy economist at the University of Houston.

“Those producers in the Permian Basin look at natural gas as a revenue center, as a profit center,” he said.

Producers can charge more for their natural gas when they can actually reach their customers.