If the U.S. government wants to contain the migration of investment efforts overseas, or if it wants to limit national dependence on LNG imports, it can provide incentives to investment by either lifting restrictions on undeveloped domestic resources or by promoting technology investment, according to ESAI in its latest Natural Gas Quarterly Review.
“Domestic LNG infrastructure expansion will ultimately increase the incentive for major oil and gas exploration and production companies to focus more of their investment abroad and less in the United States,” according to Scott DePasquale, natural gas analyst at ESAI.
There is increasing competition for investment dollars between technology advancement for domestic exploration on the one hand and the development of domestic LNG infrastructure and overseas resources on the other.
The ability to cut domestic exploration costs depends heavily on the level of investment in and market penetration of exploration and production technology. ESAI expects that future research and development investments could yield substantial returns for the E&P sector, as indigenous natural gas resources become increasingly difficult to find and develop.
“It is ESAI’s view, however, that the success of any government efforts to incentivize domestic production will have a long, bumpy road to fruition, and that the corporate locomotive currently heading toward LNG will not be derailed any time soon. As such, LNG could service nearly 8 percent of U.S. natural gas demand in ten years,” said DePasquale.
“The U.S. economy will become more dependent on LNG regardless of any domestic efforts, ushering in a new era for the domestic gas market.”