A hot U.S. LNG labor market is coming, a new Rystad Energy market update sent to Rigzone recently stated.
“As the U.S. attempts to quench the world’s thirst for LNG, the Gulf Coast is set to undergo a further boom of LNG project sanctioning over the next few years,” Rystad Energy Senior Vice President Matthew Fitzsimmons said in the update.
“The pace of this growth far exceeds what the region has experienced in the past and will significantly strain the labor market,” he added.
In the update, Fitzsimmons outlined that the Gulf Coast’s LNG project capital expenditure will jump from just over $5 billion in 2022 to approach $15 billion by 2025 and said construction activity is forecast to nearly triple as a result.
“During peak activity across all the region’s LNG projects, we see 17 greenfield projects that will start construction,” Fitzsimmons said in the update.
“This is two and a half times the amount seen during the recent peak of 2017 and will force worker premiums in the oil and gas industry for EPC labor trades to double,” he added.
“LNG developers will struggle to fill vacant roles without increasing salaries considerably, and these higher rates are likely to be felt on the operator’s bottom line,” Fitzsimmons continued.
In its latest short term energy outlook (STEO), which was released in early February, the U.S. Energy Information Administration (EIA) projected that gross U.S. LNG exports would rise from 10.63 billion cubic feet per day in 2022 to 11.78 billion cubic feet per day in 2023, and 12.59 billion cubic feet per day in 2024.
The EIA’s previous STEO, which was released in January and pegged 2022 LNG exports at 10.65 billion cubic feet per day, anticipated that these exports would rise to 12.06 billion cubic feet per day this year and 12.59 billion cubic feet per day in 2024.
Roller Coaster Ride
In a statement sent to Rigzone on February 22, energy and environmental geo-analytics company Kayrros said “gas and LNG markets have been on a roller coaster since the invasion of Ukraine”.
“LNG prices hit all-time highs on the loss of Russian supplies, only to fall more recently on a late start of the 2022-23 winter, cutbacks in European industrial use, and higher European LNG imports, notably from the U.S.,” Kayrros added in the statement.
“China’s reduced imports last year also helped stabilize the market,” Kayrros continued.