EIA: Natural Gas Use to 'Nearly Double' by 2020

Natural gas is the "fastest growing primary energy source" according to a new report published in the International Energy Outlook 2001 (IEO), put together by the Energy Information Administration (EIA), with projections that its use will "nearly double" by 2020, providing a "relatively clean fuel for efficient new gas turbine power plants."

The EIA report said that gas use worldwide would almost double to 162 Tcf in 2020, up from 84 Tcf in 1999. With an average annual growth rate of 3.2%, the "share of natural gas in total primary energy consumption is projected to grow to 28% from 23%, with the largest growth in Central and South America and developing Asia. Among the industrialized countries, the largest increases are expected for North America --- mostly the United States --- and Western Europe.

"The projections for natural gas consumption in the industrialized countries are for more rapid growth and a larger share of the total expected increase in energy consumption than are projected for any other energy fuel" according to the report. "Gas use is projected to grow by 2.4% per year in the industrial countries," compared with a rise in oil use of 1.1%. Natural gas use will account for 49% of total energy use in these countries said EIA.

The report indicates that future world gas consumption "will require bringing new gas resources to market." For example, "markets for liquefied natural gas are strongly influenced by oil and oil product markets. As the use and trade of gas continue to grow, it is expected that pricing mechanisms for natural gas will continue to evolve, facilitating international trade."

In North America, EIA reports that there is a "move toward an integrated natural gas market. Cross border natural gas pipeline capacity between the United States and its neighbors, Canada and Mexico, is increasing, export/import activity is growing, and prices in the three countries are converging."

According to the report, "pipeline capacity between the United States and Mexico has increased by 70% since 1998, from 1,150 Bcf/d to 1,970 Bcf/d." Also, several additional projects have been proposed and "may proceed if the trend of increased trade with Mexico continues. Current plans include two El Paso Natural Gas projects, one that will add 130 MMcf/d of capacity at the Arizona/Mexico border and the other a project to increase compression on the Samalyuca pipeline, which will add 60 MMcf/d at the Texas/Mexico border."

North America accounted for 5% of the world's total natural gas proved reserves at the end of 1999 but it accounted for 31.8% of the world's total production, "most of which was consumed internally." The U.S. production level of 23.2% was second only to Russia's 23.7%, said the report, and Canada was third, accounting for 7% of the total.

EIA calls LNG "a growing source of U.S. imports." Citing "higher natural gas prices, reductions in the costs of producing and transporting LNG, and the development of new sources," the EIA reports that there is "renewed interest" in LNG, with plans by several companies to add storage and build new terminals.

"All indications are that LNG imports will grow in the future," said EIA. "The aggregate existing sustainable capacity of the four U.S. facilities is 840 Bcf/year, and their capacity could be expanded." While "LNG is not expected to become a major source of U.S. gas supply, it does play an important role in regional markets, including New England. Gross LNG imports are projected to grow from 90 Bcf in 1998 to 810 Bcf in 2020."

The complete IEO report is available on EIA's web site. For a printed copy, available in April, call the EIA National Energy Information Center at (202) 586-8800.

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