Labor Shortages Could Hinder The U.S. LNG Boom

Hiring and keeping construction workers and operators for the next wave of U.S. LNG export facilities could be a challenge and raise the costs of the projects, Paul Marsden, president of the Energy global business unit at one of the top contractors in the industry, Bechtel, has told Reuters.

“Labor has grown as an inflationary concern for everyone in the industry. We need to actively forecast and manage labor availability and supply chain like never before,” Marsden told Reuters in an interview published on Monday.  

Contractors for the LNG export terminals are creating training programs and improve coordination of project timelines to avoid losing workforce when one project is completed and before the next one begins, analysts and industry professionals told Reuters.

Labor costs and work scheduling issues could add headwinds to the boom of U.S. LNG projects, which have already faced supply-chain cost inflation and increased competition to secure long-term buyers and financing. Despite the surge in LNG demand and the abundance of natural gas in the United States, America’s next LNG export boom could stall as costs have surged and financing has become more complicated with the higher interest rates. 

Even amid concerns about cost inflation, developers of LNG projects in the United States are set to approve a record-high volume of export capacity this year, driven by rising global LNG demand and increased long-term contracting from customers willing to boost energy security. The newly approved projects will further consolidate the U.S. global leadership in terms of export capacity, and with projects already approved and under construction, U.S. capacity will jump to over 18 billion cubic feet per day   (Bcf/d).  

Long-term LNG contracting has seen a flurry of deals in recent months, including from buyers in Europe, where energy security has taken center stage at the expense of concerns about emissions from natural gas imports.  

By Charles Kennedy for Oilprice.com

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