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‘Are We Entering a Golden Age of Gas?’ New report from International Energy Agency sketches scenario that could make natural gas a much bigger energy player by 2035 Wesley Loy For Petroleum News
Natural gas could become much more important by 2035, potentially achieving a 25 percent share in the global energy mix, says a new report from the Paris-based International Energy Agency.
The IEA sketches out this scenario in a special report released June 6 titled, “Are We Entering a Golden Age of Gas?”
In a press release, IEA Executive Director Nobuo Tanaka said some remarkable developments had been seen in natural gas markets in recent months, indicating “a strong potential for gas to take on a larger role.”
The report presents a sweeping and highly readable overview of the global supply and demand picture, and examines such factors as the rise of unconventional gas, China’s huge energy appetite, the impact of Japan’s Fukushima nuclear disaster, and greater use of natural gas to fuel automobiles.
Over its 127 pages, the report makes no mention of Alaska, which has enormous reserves of stranded gas, and the word Arctic appears only twice in the main text.
New assumptions The “golden age of gas scenario” incorporates new assumptions that “underpin a more positive future outlook for gas.”
A fundamental point the IEA report makes is that the world has a great deal of gas available, enough that it’s worth asking whether demand will keep pace with supply.
“Conventional recoverable resources are equivalent to more than 120 years of current global consumption, while total recoverable resources could sustain today’s production for over 250 years,” the report says.
Under the IEA scenario, gas use will rise by more than 50 percent to reach 5.1 trillion cubic meters in 2035.
“The share of natural gas in the global energy mix increases from 21% to 25% in 2035, pushing the share of coal into decline and overtaking it by 2030,” the report says.
Unconventional gas ‘revolution’ Unconventional gas resources include tight gas, shale gas, coalbed methane and gas hydrates.
“Unconventional gas may hold the key to expanding the long-term role of gas in the global energy mix,” the report says. “Already, the unconventional gas revolution has reshaped the market in the United States and lastingly affected global gas markets.”
Unconventional gas resources are now estimated to be as large as conventional resources, the report says.
“Conventional gas will continue to make up the greater part of global production, but unconventional gas becomes increasingly important, meeting more than 40% of the increase in demand,” the report says.
Of the unconventional gas types, shale gas and coalbed methane account for most of the increase in production under the IEA’s golden age scenario.
“We project that the share of shale gas in global gas production reaches 11% in 2035, while that of CBM reaches 7% and tight gas 6%,” the report says.
Unconventional gas production currently is concentrated in the United States and Canada. Poland leads the way for shale gas in Europe.
“In the United States, soaring shale gas production has promoted new south-north links to transport the gas from the areas of supply to the principal markets,” the report says.
“A key element in the success of North American shale gas production has been combining cost-effective horizontal drilling, a technique developed over the last 30 years, with hydraulic fracturing, which has been practiced since the 1940s.”
The report acknowledges, however, the major environmental challenges shale gas faces.
Power generation leads Under the IEA scenario, power generation remains the dominant sector for gas demand, replacing some coal in China, India and the United States.
The scenario sees the share of natural gas in electricity generation increase from 21 percent to 24 percent in 2035.
“The expectation that gas prices in the United States will remain low for some time, and the possibility of future action to reduce greenhouse-gas emissions (even though no mandatory CO2 pricing is in place), are likely to contribute to continued growth in new gas-fired capacity,” the report says.
While mandatory systems to reduce greenhouse-gas emissions have not materialized in many countries, utilities view gas-fired generation as a lower-risk option compared to coal, the report says.
Many countries are rethinking the role of nuclear power in the wake of the Fukushima nuclear disaster in Japan.
“To the extent that future nuclear power capacity is lower than previously expected, demand for gas in power generation is likely to increase,” the IEA report says.
Regional, environmental considerations Where is the future of gas most robust?
“Gas is a particularly attractive fuel for countries, such as China and India, and the Middle East region that are seeking to satisfy rapid growth in fast-growing cities,” the report says. “These emerging economies will largely determine the extent to which gas use expands over the next quarter of a century.”
China is aggressively promoting gas, and it will be not only a prodigious gas user but also one of the world’s largest gas producers.
The IEA report says the gas market won’t become truly globalized, and that North America will remain largely self-sufficient and “essentially isolated from inter-regional trade.”
While gas is a cleaner fossil fuel compared to oil and coal, gas is not an environmental cure-all for the planet, the report says.
“An increased share of natural gas in the global energy mix is far from enough on its own to put us on a carbon emissions path consistent with an average global temperature rise of no more than 2°C,” the report says.
Find the entire IEA report at www.iea.org.
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