Natural Gas Emerging as the World's Go-To Fuel
Natural gas is the cleanest, most versatile, and most flexible fossil fuel. Gas emits 50 percent less CO2 than coal and 30 percent less than oil, not to mention having near zero local pollutants that cause smog. In addition, in contrast to coal (65 percent for power) and oil (60 percent for transport), gas has a variety of uses. Gas gets utilized in the power, industry, commercial, residential, and the transportation sectors. And increasingly important as nations seek to decarbonize, gas is the backup generation source for intermittent renewables. It is gas that fills in for those frequent times when the “the wind isn’t blowing” and “the sun isn’t shining.”
This all explains why gas today provides a rising 30 percent of the energy used in the rich OECD economies. Now, the still developing countries – which constitute 85 percent of the global population – hope to follow the Western model in making a global “dash to gas.” China and India especially have national strategies to lower their overdependence on coal and lift gas’ 8 percent share of energy supply to around 20 percent.
Since 2000, global gas reserves have expanded over 50 percent to 7,000 Tcf. In turn, total demand since 2010 alone has risen 25 percent to 380 Bcf/d. The rapidly growing LNG trade is encouraging more gas usage, evolving this longtime regional product into a global and fungible commodity like oil. LNG continues to extend its ~15 percent share of the world’s gas consumption by connecting distant suppliers and buyers. LNG investments hit $50 billion in 2019 alone, with hundreds of billions of dollars more on the horizon.
The U.S. shale revolution itself is at the heart of the global “dash to gas.” Over the past decade, U.S. gas production has risen over 60 percent to 93 Bcf/d. Excess supply has helped the U.S. become the third largest LNG supplier in just a few years, now shipping out over 7 Bcf/d. The growth of destination-flexible, hub-priced LNG exports from the U.S. is establishing a more liquid and flexible gas market. Along with advancing systems like FLNG, this is deepening the pool of importing nations, now at 45 versus 25 five years ago.
U.S. LNG is adding the transparency and predictably that the market has been lacking since its inception decades ago. The U.S. is also improving pricing dynamics by increasing gas-on-gas competition and spot market sales, while lowering the riskier buyer reliance on oil-indexation, overly high volume purchases, and long-term contracts. So not just lowering pricing domestically, the U.S. shale boom and its LNG are helping to keep gas prices lower globally, boosting more interest in the commodity itself.
Looking forward, the International Energy Agency (IEA) expects that the U.S. will add 30 percent of the world’s new gas production through 2030, and the country could become the largest LNG exporter within five years. To be sure, however, ongoing liquefaction capacity gains from Qatar, Australia, Russia, Canada, and some African nations are expected to keep global gas prices low and add more opportunities for buyers.
Low prices themselves are being understated in terms of locking-in more gas infrastructure and usage. They are especially required for the still developing nations because citizens simply cannot afford more expensive energy. This justifies previous World Bank President Jim Yong Kim’s view that a Western insistence on “only wind, only solar” for the world’s poor was not just impractical but utterly unfair. To illustrate, rich Germany is spending literally hundreds of billions of dollars forcing wind and solar into the system yet is now looking at building three LNG import terminals.
Indeed, many other nations understandably want to follow the same “dash to gas” that the U.S. has. The IEA has credited the shale gas boom as the key factor in why the U.S. has been reducing CO2 emissions faster than any other nation. In the not too distant future, perhaps in less than a decade, natural gas will surpass oil to become the world’s primary fuel. Farther out, the U.S. Department of Energy’s International Energy Outlook 2019 models that global gas demand will soar 40-45 percent by 2050.
WHAT DO YOU THINK?
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.
- Aramco Holds Talks with Turkish Firms on $50B Planned Projects
- Further OPEC+ Production Cuts Are Still on the Table
- QatarEnergy to Supply Bangladesh with LNG under 15-Year Deal
- India to Boost Renewables Capacity, Avoid New Coal Plants
- Chevron to Have Wastewater Pipeline for Permian Operation
- USA Steel Major Taps ExxonMobil for Carbon Capture
- Woodside Awards Contracts for Decommissioning of Australia Fields
- Kinder Morgan to Expand Gas Capacity at Texas Gulf Coast Facility
- ADNOC Drilling Beefs Up Hybrid Land Rig Fleet
- Is There a Danger That Oil and Gas Runs out of Financing?
- Which Generation Is Most in Demand in Oil, Gas Right Now?
- North America Rig Count Reduction Rumbles On
- Top Headlines: What Will World Oil Demand Be in 2023?
- Will the World Hit Net Zero by 2050?
- Exxon and Chevron Shareholders Reject Toughening Climate Goals
- Analyst Flags USA-Made Oil, Gas Field Machinery Order Trend
- Kenya Airways Becomes First African Airline to Fly on Eni's SAF
- Canada Gas Output Rebounds as Wildfires Subside: S&P Global
- ConocoPhillips Preempts TotalEnergies' Sale of Surmont
- Who Is the Most Prolific Private Oil and Gas Producer in the USA?
- USA EIA Slashes 2023 and 2024 Brent Oil Price Forecasts
- BMI Reveals Latest Brent Oil Price Forecasts
- OPEC+ Has Lots of Dry Powder for Further Cuts
- Could the Oil Price Crash in 2023?
- Invictus Strikes Oil, Gas in Zimbabwe
- BMI Projects Gasoline Price Through to 2026
- Is There a Danger That Oil and Gas Runs out of Financing?
- What Will World Oil Demand Be in 2023?
- What Does a 2023 USA Recession Mean for Oil and Gas in the Country?