Growth of US Natural Gas Markets & How Natural Gas Pipelines Enable the Growth of LNG Supply in the US

The expansive network of over 3,000,000 miles of natural gas pipelines across the United States forms the backbone of the nation’s energy supply, fueling our nation’s existing natural gas markets and consumers, and enabling strong future economic growth and prosperity. With natural gas supplying nearly 40% of US electricity generation today, in addition to the direct consumption of natural gas industrial, commercial, and residential customers, the infrastructure enabling its reliable and affordable transport has an important impact across vital US industries, businesses, and residential consumers.

As the country ushers in increased renewable energy sources, natural gas remains pivotal in supporting renewable integration by supplementing the intermittent nature of renewables, with reliable natural gas pipelines, storage, and baseload gas-fired power generation.

This complex interplay of supply and demand drivers makes natural gas infrastructure a critical consideration for the US economy, and indeed the global economy as well. Within this, a key phenomenon is the tremendous growth in US liquified natural gas (LNG) production and export to markets around the globe.  In this article, we analyze the trajectory of natural gas in enabling industrial expansion, residential and commercial usage, global LNG trade prominence, and reliability of service amidst the rise of renewable sources.

Enabling Industrial Growth with Natural Gas Pipelines

Fueling Industrial Expansion, Efficiency and Operability

Natural gas pipelines play a pivotal role in fueling the expansion and efficiency of various US industrial sectors. By providing a reliable, cost-effective energy supply, natural gas, and its associated infrastructure provide a continuous energy source that enables continuous operational up-time, keeps operating expenses low, and allows funds to be directed to facilities expansions, greenfield facilities, the hiring of employees, and other operational and growth-related pursuits.  The important industrial sectors of petrochemicals, metals, paper, glass, and electronics leverage natural gas not just for direct heat and power, but also as a feedstock within the nature of some of their manufacturing and production processes.  These industrial sectors are critical to our economic prosperity by creating employment and providing critical products to our everyday lives.

The Economic Impact on Industries and US Economy

The cascading economic benefits of natural gas usage and supportive infrastructure has been conclusively established. By providing a steady and affordable energy supply, these pipelines and storage infrastructure have helped in lowering the cost of goods and services, thereby benefiting, and enabling, the US economy at large. Each day, the natural gas sector supports over 4 million direct jobs, as well as the millions more of jobs within the many services sectors that support the natural gas and natural gas transportation sectors.

The natural gas transportation sector is also a very significant tax contributor, through the payment of federal and state income taxes, county ad-valorem taxes, and sales taxes for goods purchased, to name a few. In addition, the natural gas transportation sector significantly benefits landowners through the payment of right-of-way fees to landowners, in exchange for the right to build, operate, and maintain pipelines.

All of this, enables a significant portion of the US economy, but also enables the potential for trillions in new private investment and millions more jobs as natural gas propels industrial growth, and future the positive impacts on local, state, and federal economies.

Natural Gas in Residential and Commercial Use: A Surge in Demand

Meeting Residential and Commercial Energy Needs

According to the US EIA, approximately 51% of US households today depend on natural gas for appliances and heating needs. Also according to the US EIA, of all commercial buildings in the US, such as hotels, hospitals, schools, restaurants, and office spaces, 34% of the energy needs are fulfilled by natural gas. Expanded gas transmission and local distribution pipeline and storage capacity over time has enabled this growing demand to be served, providing households and businesses with reliable and affordable energy.   For those residences and 60% of all commercial buildings that are served by electricity directly for energy and space heating and cooling, many are supplied by electricity generated by natural gas, as outlined above.

The Rising Tide of LNG: Export and Market Dynamics

US as Among the Global LNG Supply Leaders

Spurred in part by the shale boom, the United States has emerged as currently the world’s largest natural gas-producing countries, as well as already the third largest global LNG exporter (behind Australia and Qatar) within a few short years. As shown in the figure below by the US EIA, US LNG liquefaction and export capacity have reached approximately 11 billion standard cubic feet per day, from a natural gas importer prior to 2016 .

Natural gas production gains have turned the US from a net importer to exporter, unlocking new revenue streams while conferring energy security advantages to allies through LNG shipment diversification.

Impact on International Energy Markets

The rise of US LNG exports has eased supply constraints globally, increased competition among exporters, lowered costs for importers, and improved market liquidity. The US Energy Information Administration estimates that global natural gas demand will grow by up to 57% from 2023, to 2050.. This growth will be underpinned by abundant, attractively priced US LNG capacity brought online.

For emerging economies, affordable LNG as a fuel source helps cut pollution in comparison to coal, wood, and liquid petroleum products, while supporting growth. Meanwhile, in Europe, US exports are reducing dependence on Russian pipelines. The strategic impact on energy security and fuel diversification makes continued infrastructure build-out and export terminal development a near and long-term geopolitical imperative.

Future Outlook: Natural Gas and Energy Transition

Natural Gas Infrastructure Required to Support Intermittent Renewables

We have discussed in previous articles that, as solar and wind renewable power generation penetration increases, the intermittency of these sources, and the current inability to match these types of power generation with the daily and seasonal variable demand profile, requires the complimentary expansion of US natural gas power plant baseload, peaking power generation, and the increase of natural gas pipeline and storage infrastructure, providing a crucial grid reliability function.

And so, as the penetration of renewable energy increases, so does the importance of natural gas as a balancing source. This symbiotic relationship underscores the importance of continued investment in natural gas pipelines and storage facilities.

This infrastructure is crucial not only for ensuring the reliability of energy supply but also for facilitating a smoother transition to a low-carbon future. The expansion and modernization of natural gas pipelines and storage systems will play a pivotal role in supporting the intermittent nature of renewables, ensuring that the lights stay on even when the sun doesn’t shine or the wind doesn’t blow.

The future of American energy undoubtedly lies in a nuanced mix of renewables and natural gas, leveraging the unique attributes of both to deliver affordability, reliability, and sustainability. Robust infrastructure development and supportive policy frameworks that acknowledge this reality will empower the nation’s next chapter of energy leadership.