Save for later Print Download Share LinkedIn Twitter Exxon Mobil Senior Vice President Neil Chapman sees natural gas markets being “challenged” in solving the supply crunch that has gripped Europe and major Asian economies heading into winter given the dearth of rapid-response supplies.Outside of US shale gas, “there’s not a lot of other latent capacity that’s not being produced today,” Chapman told the Energy Intelligence Forum 2021 on Monday.That reality stands in contrast to global oil markets. Oil prices have more than doubled since late October, but roughly 6 million barrels per day of immediately available spare capacity from Opec-plus is on the sidelines, according to Energy Intelligence’s Oil Markets Service. US tight oil output could also add flexible swing barrels, if needed — provided producers still prioritize returns while adding capacity.Perfect StormGas is not so lucky — especially in Europe.Chapman noted that the continent’s largest gas field, Groningen, will be permanently wound down over the next year following a string of earthquakes associated with its development.The extreme financial pain levied on producers last year amid the pandemic-led downturn also means that key producing regions like the North Sea continue to see depressed investment.“So from a European perspective, you’ve got a sort of declining local production, and so then you’re reliant either on gas from Russia or from LNG cargoes,” Chapman told the virtual event.Continued expansion of the global LNG market means more cargoes are sailing the seas than ever before. But Europe isn’t the only one buying.China has been actively scooping up cargoes to ensure sufficient supply this coming winter, determined to avoid the scramble that led to then-record price highs for Asian LNG during last year's biting winter. With gas inventories low coming out of that winter and demand further buoyed as economies reopen, many LNG and gas benchmarks have hit new price highs in recent days.“I think [the supply crunch] is partly compounded by what we’ve seen over the last four or five years, where there has been, frankly, in our calculation, less investment in the industry than is going to be needed, and so therefore supply gets very, very tight,” Chapman said.Even flexible US supply isn’t responding as one might think. Domestic US gas prices have hit decade highs in the high-$5 per million Btu range and exported spot LNG volumes have the potential to tap markets where prices are roughly five times higher. Yet producers are not tripping over themselves to drill.Chapman sees the severe financial distress the industry felt last year as the main cause of producers’ “reluctance” to spend more. Investor demands for shareholder returns over growth are also often credited for keeping producers at bay. Taste of What’s to Come?When it comes down to it, Chapman essentially sees the current gas price crisis as a classic cycle gone wild given the extreme dislocations caused by Covid-19. But as noted above, he also sees some of the foundations of the crisis built over years given the industry’s general embrace of lower spending.In Exxon’s view, oil could face its own squeeze down the line for similar reasons.“We have been talking about the lack of investment in the industry for the last two or three years. Our calculation would suggest there's just simply not enough investment going in to meet the demand,” Chapman said.Of course, the Exxon executive acknowledged that this reality comes down to how global demand behaves.“If you think demand is going to drop off very, very quickly, then it's a different story,” he said.Exxon is not in that camp.