The Future for Natural Gas Looks Rosy
by Bob Shively, Enerdynamics President and Lead Facilitator
In a recent Energy Currents Blog, we asked the question “Are Natural Gas Bans the Next Energy Industry Trend?” And while restricting growth in natural gas demand is a real policy mandate in some regions of the U.S. and Europe, the overall global picture for natural gas continues to look bullish. Here are some global gas trends as noted in the recent International Gas Union (IGU) Global Gas Report 2019:
Source: IGU Global Gas Report 2019, page 10
The report notes several trends that are positive for the gas industry:
- Consumption is growing in China, Europe, and the United States. Much of the growth is due to lower gas prices driving expansion and fuel switching in industrial and power generation sectors. The International Energy Agency (IEA) recently noted that in 2018 gas consumption grew by almost 4.6% and accounted for nearly half of the increase in global energy demand.
- Gas production has grown to support the growth in consumption driven by rapidly increasing production in Russia and the United States.
- Infrastructure to connect gas production to gas consumers has continually expanded including numerous LNG liquefaction and regasification facilities and key new pipelines.
These trends have resulted in lower gas prices and increased availability of supply in multiple regions around the world.
The report summarizes the situation globally as follows:
Source: IGU Global Gas Report 2019, page 12
Not too long ago natural gas was a more expensive fuel than coal, and gas users in many regions of the world could not always count on having access to supply when needed. As the IGU points out, competitive pricing and security of supply are two selling points for gas providers. And in many parts of the world, gas is considered an environmental benefit as expansion of gas use displaces other dirtier fossil fuels such as coal and fuel oil. The IEA World Energy Outlook 2019 forecasts that gas consumption will continue to grow through 2030 and maybe longer depending on government policies:
Source: IEA, "Gas demand by region and scenario, 2018-2040", IEA, Paris
The world has already begun to see a seemingly inevitable decrease in coal usage, and credible arguments can be made for the view that oil consumption may currently be at its peak and will soon begin to decline. But it appears that natural gas is the exception among the fossil fuels, and the gas industry still has many years of robust growth left to enjoy.
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