Natural gas consumption worldwide is expected to increase on average nearly 2% a year through 2030, to 163 Tcf from 100 Tcf in 2004, the Energy Information Administration (EIA) reported in its International Energy Outlook 2007. By then, the largest source of U.S. incremental gas supply "by far" is expected to come from liquefied natural gas (LNG), which is projected to jump 50% from 2004 levels.
Rising world oil prices will increase the demand for global gas, and by 2030, industry will account for about 43% of the market. Gas still will be the fastest-growing energy source for electricity generation, with total gas use worldwide surging to 36% from 31%. However, coal also makes surprising gains.
"Natural gas prices are likely to vary from region to region, depending on the size of available resources and their distance from end-use markets," the report noted. "In the United States, dependence on relatively expensive domestic supplies of unconventional natural gas and imports of LNG is expected to increase over the projection period, and projected prices in the U.S. market thus tend to be at the high end of the range."
Currently, the United States has five LNG import facilities in operation with a total peak capacity slightly above 5.8 Bcf/d, the report said. If only the four additional facilities now under construction along the Gulf of Mexico are completed, U.S.LNG import capacity will more than double.
"Peak annual U.S. LNG import capacity in 2030 is projected to reach 6.5 Tcf, with actual imports of 4.5 Tcf," the EIA said. "The growth of U.S. LNG imports is expected to be strong through most of the projection period. The significant growth in U.S. LNG imports is indicative of the country's growing dependence on imports and the increasing globalization of natural gas markets." Emerging LNG markets in Canada and Mexico "also highlight this trend."
Canada's unconventional and Arctic production both are forecast to grow, and LNG imports into Eastern Canada are projected to begin by the end of the decade. However, the gain in LNG, Arctic and unconventional supplies won't be enough to offset a decline in conventional output from the country's biggest producing area, the Western Canadian Sedimentary Basin. Gross LNG imports are projected to exceed gross pipeline imports from Canada after 2015, and Canada's share of gross U.S. imports is projected to decline to 25% by 2030.
Rising gas prices would make it economical for two long-proposed North American pipelines to come on-line, the assessment found.
"The first, a Canadian pipeline to transport natural gas from the Mackenzie Delta, is expected to become operational in 2012," according to the forecast. The Mackenzie pipe remains bogged down in regulatory delays, however (see Daily GPI, May 21).
"The second, an Alaska pipeline, is expected to begin transporting natural gas from Alaska to the Lower 48 states in 2018, contributing significantly to U.S. domestic supply." The Alaska pipe is expected to move forward following legislative approval earlier this month, but it also remains a question (see Daily GPI, May 21).
Still, Alaska's gas output is expected to account for all of the projected growth in domestic U.S. conventional gas production by 2030, with flows on the state's pipe growing to 2.2 Tcf. "As a result, Alaskan production is projected to account for 22% of the increase in U.S. natural gas supply in 2030 relative to the 2004 total."
Most of the large onshore conventional gas fields in the United States already have been discovered, making unconventional gas production -- especially from tight sands formations -- a "significant" source of incremental supply in the future. The assessment has unconventional gas supplies increasing to 50% in 2030 from 40% in 2004. Unconventional gas is expected to account for 28% of the total increase in domestic supply.
With oil and gas prices continuing to rise, coal will be "an attractive fuel for nations with access to ample coal resources -- notwithstanding government policies at reducing coal use -- and its share of world energy consumption is expected to jump 28% by 2030.
"In particular, the United States, China and India are well-positioned to displace more expensive fuels with coal, and together the three nations account for 86% of the expected increase from 2004 to 2030," the assessment noted.
The report, which provides EIA's assessment of all of the energy sectors worldwide, may be downloaded at www.eia.doe.gov/oiaf/ieo/index.html.
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