China and the Middle East, spurred by lower prices and ample supply, will drive global natural gas demand growth in the next 25 years as consumption in Europe fails to recover to peak levels seen in 2010, according to the International Energy Agency.
Both regions will become larger gas users than Europe by 2035, the Paris-based IEA said in its World Energy Outlook 2015. Global demand for gas, a cleaner-burning fuel for power generation than coal, will rise 1.4 percent a year to 5.16 trillion cubic meters (182 trillion cubic feet) in 2040, making it the fastest-growing fossil fuel. The agency forecast 1.6 percent annual growth to 5.38 trillion cubic meters in last year’s World Energy Outlook.
“With gas prices already low in North America, and dragged lower elsewhere by ample supply and contractual linkages to oil prices, there is plenty of competitively priced gas seeking buyers in the early part of the Outlook,” the IEA said.
Gas will account for 24 percent of power generation by 2040, up from 21 percent in 2013, as the share of dirtier coal falls to 30 percent from 41 percent. The fuel is also being used to spare use of oil and back up renewable energy generation.
Price Slump
U.S. futures, used to price contracts for the first liquefied natural gas exports from the shale boom, declined 46 percent over the past year. Exports from the Sabine Pass terminal are scheduled to start early next year, adding to expanding output of the super-chilled fuel from Australia. Brent oil declined 43 percent in the past year, dragging down oil-linked gas contracts.
“These price developments seem set to boost natural gas demand in major importing regions, reinforcing our view that natural gas is a fuel well placed to expand its role in the global energy mix,” the IEA said.
Gas demand in the European members of the Organization for Economic Cooperation and Development will remain little changed at 528 billion cubic meters in 2040, rising 0.1 percent a year from a forecast for 0.7 percent annual growth in last year’s report. China’s consumption is expected to rise 4.7 percent annually, the fastest growth among all regions, to 592 billion cubic meters, the report shows. The Middle East will expand gas use by 2.1 percent a year to 738 billion cubic meters.
Coal Demand
Within the OECD, North America is the only region with significant demand growth, the IEA said. In the U.S., the largest consuming country, gas will displace coal as the largest source of power generation by the mid-2020s. By the early 2030s, it will overtake oil as the most used fuel in the U.S. primary energy mix, the report says.
Global coal demand growth is set to slow to 0.4 percent annually, the report shows. Energy efficiency, competition from renewables, and coal in power generation in some countries may constrain long-term expansion of gas, the IEA said.
Gas use could also be curbed if delayed investments amid lower commodity prices tightens the markets in the 2020s, the report said.
“Emissions of methane, a powerful greenhouse gas, along the supply chain will dent the environmental credentials of gas if there is no concerted policy action to tackle these leaks,” the IEA said.
Unconventional Gas
While unconventional gas will make up about 60 percent of supply growth, the spread of projects such as shale-gas plays outside North America will be “more gradual and uneven,” the report said. Global production of shale gas, coalbed methane and tight gas is set to rise to about 1.7 trillion cubic meters in 2040 from 630 billion cubic meters in 2013.
China aims to boost unconventional gas production to more than 250 billion cubic meters by 2040, the report said. Such growth is less certain amid challenges such as geology, limited water availability, population density in some areas, and regulatory issues related to pricing, the IEA said.
Bob Owens on Tue, 10th Nov 2015 7:18 pm
Why are articles like this in this blogspot? Predicting fossil fuel use 15 years into the future? Come on!
makati1 on Tue, 10th Nov 2015 7:53 pm
Bob, I agree. Nothing more than guessing and we can all do that. I would not bet on anything projected into the future, except that the sun will come up tomorrow, as being correct.
I suspect that a lot of authors need something to justify their paycheck. This one is not worth $5. Maybe they should all become fiction novel writers? They have the experience. LOL
idontknowmyself on Tue, 10th Nov 2015 9:27 pm
This is my comment for youngtards. I am sure they will understand it.
Pipi, caca, shit, piss.
rockman on Wed, 11th Nov 2015 7:57 am
“U.S. futures, used to price contracts for the first liquefied natural gas exports from the shale boom”. Not sure how it’s done in Ausieland but that’s not how LNG from the first US export facility will be priced. It’s laid out in detail on Chenier’s web site if you care to confirm. LNG on the Chenier contract will be based of the then current price of NG at the Henry Hub in S La. In addition the price will include the cost to compress and ship the NG as well as a built in profit for Chenier.
Of course a buyer can try to hedge the actual price they pay for the HH NG. But that’s a bit of a gamble considering the contract runs for 20 years. It’s one thing to hedge oil/NG prices when you’re selling. But in this case let’s say in 10 years HH is selling for $10/mcf. How would you hedge that price today: buy $8/mcf future contract with a 10 year maturity? In that case you saved $2/mcf. But what if NG is selling for $6/mcg in 10 years. You lose $2/mcf because you have to pay the difference between your hedge price and that of NG at the time the hedge matures.
But there are much more complicated hedging methods that could soften the blow. But in any case the LNG has guaranteed contractual prices the buyer will have to pay regardless. This is how long those very expensive LNG facilities are built: they cannot justify such a huge investment based upon some projection of future LNG demand and pricing. A typical LNG investment might take 5+ years to recover all the capex even under very favorable market conditions for the seller.
BTW HH NG is neither shale or conventional production: it’s all the NG from all the different sources that merge at that spot in S La. In all probability most of the physical NG will be from conventional reservoirs including a lot from the offshore GOM wells.
Kenz300 on Wed, 11th Nov 2015 10:14 am
Wind and solar are the future…….fossil fuels are the past.
Half Of All Power Plants Built Last Year Were ‘Green’
http://www.huffingtonpost.com/entry/renewable-power-plants_5641fd3fe4b0b24aee4bbd49
Boat on Wed, 11th Nov 2015 11:05 am
Is coal able to take another blow?
http://oilprice.com/Energy/Coal/US-And-Japan-Agree-To-Cut-Financial-Support-For-Coal-Exports.html
The U.S. and Japan have long supported overseas buyers of coal through low-cost finance, as a means to boost their own exports of both coal and coal-based technology. In an effort to cut down on greenhouse gas emissions from coal – one of the largest sources of carbon pollution – the U.S. and Japan could end such support.
The proposal would call on all OECD countries to do the same. Japan is the largest supporter of coal-fired power plants around the world, so its support is critical for the deal. Germany, another purveyor of public finance for coal, has also agreed to sign up.
According to an FT source, if the deal is implemented it could make the “vast majority” of planned coal-fired power plants – as many as 1,000 are on the drawing board – disqualified for accessing government backed low-cost loans. Billions of dollars in finance would be cut off under the deal, allowing only the cleanest coal plants to receive assistance, and only if renewables are not viable.