World gas demand growth falls behind demand growth for coal in the latest International Energy Outlook (IEO) by the Energy Information Administration (EIA). The agency said this is the first time since it started the IEO in 1990 that the pace of gas demand growth has fallen behind that of coal, and the main reason this has happened is the higher projected prices for gas and oil.
"The higher oil prices in this year's reference case raise the projected demand for, and price of, natural gas," EIA said. "Natural gas consumption increases on average by 2.4% per year from 2003 to 2030 [from 95 Tcf to 182 Tcf]. The higher natural gas prices also make coal more cost competitive, especially in the electric power sector." As a result, coal demand is projected to grow by about 2.5% per year, just slightly faster than gas demand.
In North America, EIA notes, high gas prices are expected to discourage construction of gas-fired generation in the mid-term. As a result, only about 130 GW of new gas-fired capacity is expected to be added over the 2003-2030 forecast period, compared to 154 GW of coal-fired generation. U.S. gas consumption from power generation is projected to peak in 2020 at 7.5 Tcf, followed by a decline to 6.4 Tcf in 2030.
Gas prices in North America are expected to remain relatively high throughout the period, leading to slower gas demand growth in the industrial sector from 8.3 Tcf in 2003 to 10 Tcf in 2030. Residential and commercial gas demand growth also slows. Demand in those sectors reaches 9.6 Tcf in 2030 from 8.3 Tcf in 2003. The end result is that gas demand remains essentially flat in the United States throughout the forecast period, EIA said.
Regarding gas supply to the U.S., EIA projects that liquefied natural gas (LNG) imports will replace Canadian imports as the primary imported source of gas in the U.S. by 2010. By 2030 LNG supply to the U.S. is expected to reach 4.4 Tcf/year. By 2030, Canada is expected to consume 85% of its own gas production leaving only 15% available for export.
As for domestic U.S. supply, EIA expects Alaskan gas production to account for most of the domestic supply growth over the period with flows down the proposed Alaska pipeline reaching 2 Bcf/d by 2030.
Worldwide crude oil demand is projected to grow by 1.4% per year. And world power consumption more than doubles from 14,81 billion kWh to 30,116 billion kWh in 2030.
Natural gas is expected to capture about 26% of total world energy consumption in 2030 compared to about 24% in 2003. The power and industrial sectors will remain the largest gas consumers over the period, capturing 31% and 44% of the total demand, respectively. By 2030, gas overtakes oil as the fuel of choice in the industrial sector.
In EIA's reference case, gas demand from non-OECD (Organization for Economic Cooperation and Development) countries grows more than twice as fast as in OECD countries, 3.3% compared to 1.5%, respectively. Natural gas demand from non-OECD countries accounts for 73% of the total world incremental gas demand growth over the period.
The IEO projects world energy use will grow to 722 quadrillion Btus by 2030 from 421 quads in 2003. Energy use is projected to grow much faster in the non-OECD countries, for example 3.7% per year in non-OECD Asia (which includes China and India). Economic growth in non-OECD countries is expected to average 5% per year compared to 2.6% per year in OECD countries. For more from the IEO, go to http://www.eia.doe.gov/oiaf/ieo/index.html.
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