Home / Oil & Energy / General Energy News / Tellurian executive says U.S. needs to invest $150 billion to support gas output

Tellurian executive says U.S. needs to invest $150 billion to support gas output

The United States needs to invest $150 billion (£105.8 billion) in infrastructure to support growing natural gas production, with some producers facing shutdowns as they try to ramp up output, Tellurian Senior Vice President Amos Hochstein said on Thursday.

When oil prices rise, shale oil producers ramp up output and produce more associated gas, and there is not enough pipeline capacity to carry the gas to demand areas or for exports, Hochstein said, speaking at the International Energy Forum.

West Texas Intermediate futures have been on a gradual rising trend over the last two years, from lows hit in early 2016, and are now holding above $65 per barrel. That has lifted the whole U.S. energy complex. [O/R]

“We need well over $150 billion worth of investment in infrastructure in the United States to support the gas production that is coming online,” Hochstein said.

Shale oil producers, including those in the Permian Basin, “are reaching a point where they have to make a decision whether to restrain their production in oil because they don’t have the ability to evacuate their gas,” he said.

The problem is that the U.S. infrastructure was historically not built to handle shale oil and shale gas, which producers are able to ramp up quickly when prices rise, he said.

There has also been too little investment into liquefied natural gas (LNG) export terminals, he said, which would provide an outlet for surplus gas.
Source: Reuters (Reporting by Sudarshan Varadhan and Florence Tan; Editing By Tom Hogue)

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