The International Energy Agency (IEA) said U.S. gas production could reach 797 billion cubic meters (bcm) (28.14 Tcf) by 2018, 17% higher than last year's total of 681 bcm (24.05 Tcf), which was a 5% increase over 2011. That's thanks to shale gas. Other countries have it, but they won't be getting at it for some time, and that fact will keep the United States among the leading natural gas producers.
"As in the five previous years, shale gas continues to be the key driver behind this [U.S. production] growth," IEA said in its Medium-Term Gas Market Report 2013. "Shale gas production represented around 39% of the total [U.S.] gas production in 2012, rising from 34% in 2011 and just 3% in 2002. In a period of five years (2007-2012), U.S. shale gas production grew sixfold, increasing from 45 bcm (1.59 Tcf) to around 264 bcm (9.32 Tcf), with more than 75% of the current production taking place in four shale plays: Marcellus, Barnett, Fayetteville and Haynesville.
"Over the last two years, the production of associated gas from the plays rich in oil and liquids exceeded that of dry gas plays. In 2012, the production of associated gas with oil and liquids expanded to 51% of total U.S. production, from an average of 49% in 2011. By 2014, this production is expected to rise to 54%."
What's been happening in the U.S. shale patch is going to stay there, at least for the time being, IEA said. "Shale gas continues to capture the attention of companies and governments alike, but no major development is expected to take place outside North America and possibly China by 2018," the agency said. "Over the forecast period, most unconventional gas developments will be in coalbed methane and tight gas."
"The supply picture in 2012 underlined significant contrasts among regions as the United States contributed single-handedly to almost half of the incremental gas supply," IEA said. "The second-largest increase came from Norway, followed by Turkmenistan, Saudi Arabia, Qatar, and China. In contrast, Russian gas production fell substantially, driven by a combination of lower domestic demand and a reduced call for expensive Russian gas from importing countries."
Total global gas demand is expected to rise to nearly 4,000 bcm (141.24 Tcf) in 2018 from 3,427 bcm (121 Tcf) in 2012. Gas will continue to increase its share of the global energy mix, growing at 2.4% per year between now and 2018, IEA said, but this is lower than last year's forecast of 2.7% due to persistent demand weakness in Europe as well as difficulties in upstream production growth in the Middle East and Africa.
"Even though we have revised our growth estimates downwards, the 'Golden Age' of gas remains in full swing [see Shale Daily, June 8, 2011]," said IEA Executive Director Maria van der Hoeven as she presented the report in Saint Petersburg. "Gas is already a major fuel in power generation, but the next five years will also see it emerging as a significant transportation fuel, driven by abundant supplies as well as concerns about oil dependency and air pollution. Once the infrastructure barriers are tackled, natural gas has significant potential for clean-energy use in heavy-duty transport where electrification is not possible."
China is dwarfing other regions in the use of gas in the transportation sector, IEA said. "However, the shale gas revolution has triggered strong investor interest in natural gas as a transport fuel in the United States," the report said. "Gas use in road transport represented 1.4% of global gas demand in 2012, but this share should rise to 2.5% by 2018 as consumption grows to around 50 bcm (1.77 Tcf) in the same period (9.4% of additional gas demand). This covers around 10% of the incremental energy needs of the transport sector, more than electric cars.
"In the United States, the expanding use of gas in transport is supported by the divergence between gas and oil prices, as well as policy incentives," IEA said. "Especially promising in the United States is the conversion of long-haul heavy trucks from diesel fuel to LNG [liquefied natural gas]."
While natural gas for transport gains traction in the United States, IEA said the country's gas producers can look forward to demand growth "in all sectors, with the power generation sector alone accounting for half of overall growth."
However, IEA said output from U.S. gas-fired power plants will decline this year due to strengthening gas prices and the consequent improved competitiveness of coal-fired power.
"Additional gains from gas-fired generation will therefore be driven by increasing power demand," IEA said.