Natural Gas Infrastructure Demands in 2021

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The natural gas infrastructure went through major changes and pressures throughout 2020. 2020 was an unprecedented time for the energy industry, and both oil and gas saw declines in 2020 — especially early in the year. But natural gas is rebounding and demand is improving, and this is expected to continue throughout 2021. Let’s take a look at how the Permian Basin and Eagle Ford shale regions are being developed, as well as the current natural gas demand.

Permian Basin Oil Production

It’s believed that Permian Basin oil is going to rebound significantly through 2021. Natural gas production is more stable than oil production, seeing fewer valleys. For oil, there was a steep drop off in late 2020. For natural gas, production was relatively stable throughout. 

Regardless, Permian Basin oil production and natural gas production are at highs. Permian basin pipeline capacity has been increased as of January, primarily by the Permian Highway Pipeline, which can move 2.1 billion cubic feet per day.

The Permian Basin is, of course, one of the most important oil producing areas, accounting for 40 percent of the US oil. But for natural gas, everything is more distributed; only 15 percent of natural gas is produced in the Permian Basin. Gas production has started to exceed pipeline capacity in the Permian Basin and, consequently, prices have started to fall.

Eagle Ford Shale Development

About 40 percent of Eagle Ford’s shale production is expected to be within the first five years of development, so there will be a substantial decline thereafter. However, this should produce a significant amount of oil and natural gas that will then be able to be put into distribution.

Eagle Ford Shale is one of the most significant economic investments in Texas’ history and is of significant importance to the state and the industry. Nevertheless, Eagle Ford’s production is expected to decline in 2021 by about 10 percent. This will not be a permanent decline, however. By 2022, both oil and natural gas are going to be more in demand, and both the Eagle Ford and Permian Basin regions should be in full production.

The Eagle Ford pipeline capacity, which connects to the Permian basin, will be 450,000 barrels per day. Further, if the Eagle Ford shale trend improves, capacity could be increased to 540,000 / day. The Eagle Ford shale reserves are expected to last up to 30 years. Regardless, the Eagle Ford shale pipeline has boosted capacity significantly.

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Natural Gas Infrastructure Demands

It’s easy to see that production levels are improving, throughout both the oil and natural gas industries. But demand is increasing. EIA has increased price forecasts and expects higher wholesale United States natural gas prices. The EIA expects that electricity consumption could rise up to 1.3 percent in 2021. 

Of course, that also means that consumers may be seeing higher bills. But higher usage is also predicted. As businesses start to operate again and economies start to flow, it’s likely that natural gas will start to be used even more — that includes restaurants, with the restaurant industry being significantly weakened by COVID-19, and the travel industry, which has been effectively stalled over the course of the last year. 

During COVID-19, energy production saw a drop in demand due to the drop in activity throughout the world. Many businesses were shuttered, and many individuals ceased to travel. Oil, more linked to traffic, suffered substantially more than natural gas, more linked to household use. 

Natural gas and oil are both on the rebound. Though a significant amount of energy use dropped during COVID-19, industries are now recovering and starting into action. Due to economic and business stimulus, it’s likely that the economy will be opening up again shortly. Because of that, construction is going to resume on pipelines, pipelines are going to start moving again, and the natural gas and oil industries are very likely to continue to grow. Both natural gas and oil are still at highs relative to the last decade — and growing.

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Where Is Construction Booming in the United States?

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As the economy reopens following the depths of the COVID-19 crisis, it’s likely that construction is going to be booming in quite a lot of areas. So, where is construction booming around the United States?

What is a Construction Boom?

A construction boom is an atypical increase in construction in a specific area of the country. Often, it occurs because of new opportunities in an area. When new industrial developments begin, for instance, residential properties are often created around them. When cities start to expand, properties arise in the surrounding areas as “bedroom communities.” Construction booms can also occur after depressed times (such as the COVID-19 pandemic), because the industry is artificially slowed. Now, following the pandemic, many companies are starting to build again.

Where is Construction Booming?

The construction forecast is interesting because the United States is currently contemplating increased and more permanent reliance on work-from-home infrastructure. It’s difficult to anticipate which areas are going to grow when remote workers may actually be fleeing higher-priced cities. Consequently, it’s possible that some developments may be seen in areas that were traditionally ignored; some developers may be rolling the dice on more rural locales.

Most importantly, the infrastructure market is likely to see some increases. Companies are still hesitant to get into commercial building and residential properties are going to be delayed, often because subcontractors can be difficult to contract following the pandemic. But the White House has announced its intention to invest in infrastructure projects, which means construction companies may be working with government contracts.

The construction industry is facing many challenges. Foremost, it faces the challenges of uncertainty. It’s difficult for anyone to know when the last of the effects from the pandemic will truly end and when people will feel safe and comfortable starting to fully return to commercial office complexes, and otherwise invest in commercial real estate. Many companies are trying their best to protect their employees. And many subcontractors have gone out of business or have paused their subcontracting, which means general contractors are finding it very difficult to get the workers they need. These are universal problems which are going to haunt the construction industry for some time.

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What Areas of the US Are Growing?

In 2021, it looks like the states that are seeing the majority growth are Texas, Florida, Georgia, Arizona, Washington, and Nevada. These are the states that are most likely to see residential developments, because they are the states that are going to require them.

The fastest-growing cities are still in Texas. Though the oil industry did suffer setbacks in 2020, it’s now starting to recover. This fuels the economy. More people are moving into Texas, which also means that more homes are going to be developed out of a necessity.

Continued growth in the new homes market indicates that new homes are still being built, but largely in areas where the market moves very fast. That includes areas such as New York, Pennsylvania, and New Orleans. And those who are working remotely may take the opportunity not only to move to more rural areas, but also to move to more desirable areas.

Altogether, there’s a lot of reason to believe that while development is slowed, it’s going to start booming soon, and in quite a lot of regions. This is because there are many reasons to build in many areas, whether it’s a growing economy, or a fast-paced housing market.

While we may not see a completely booming construction industry until 2022, the United States is going to see a significant increase in construction throughout 2021. Many projects that haven’t yet broken ground are going to break ground now because the pandemic pause is no longer a factor. One thing is sure, however; there will be need for land property survey companies like Landpoint in advance of all this construction.

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