On My Mind : September 15 2025

On My Mind: Episode 45: September 15 2025In this episode, I take a more somber view of the industry than my normal optimistic view. I have recently returned from Gastech, the giant industry gathering that was held in Milan, Italy last week. Instead of positive thoughts, I left with a feeling of concern which can be summed up as 'Irrational Exuberance.' Much like the crazy dotcom era twenty years ago when this term was first used, we are in danger of losing the plot. The gas /LNG industry needs incremental growth to meet incremental energy demand. As I have argued in past episodes, we live in a world of Energy Addition, not Energy Transition. If we grow too fast, and bring too much supply to the market too quickly, we are in danger of upsetting the delicate balance of supply vs demand. At Gastech, there were countless projects and expansion projects tripping over themselves try to get to Final Investment Decision…many of them on the back of offtake agreements with traders and aggregators – not end users. All of this in an environment of low LNG prices which are likely to persist in the near term. And, on the other side of the ledger, we have high capex, high steel prices, high interest rates and high uncertainty of tariffs and other trade barriers. This could get ugly before it gets better. The Fear of Missing Out (FOMO) that is driving projects all over the world to FID may not match the steady incremental demand growth expected. A lot of project developers and equity investors could be impacted if project economics don't live up to optimistic forecasts.This is a good time to be in the permitting process in the US and elsewhere (such as Canada)… but may not be a good time to be committing to add yet more volumes into a saturated market. Gulfstream LNG is taking this prudent approach. For others, I suggest slowing down the mad rush to FID!