Natural gas is the “fastest growing primary energy source”according to a new report published in the International EnergyOutlook 2001 (IEO), put together by the Energy InformationAdministration (EIA), with projections that its use will “nearlydouble” by 2020, providing a “relatively clean fuel for efficientnew gas turbine power plants.”

The EIA report said that gas use worldwide would almost doubleto 162 Tcf in 2020, up from 84 Tcf in 1999. With an average annualgrowth rate of 3.2%, the “share of natural gas in total primaryenergy consumption is projected to grow to 28% from 23%, with thelargest growth in Central and South America and developing Asia.Among the industrialized countries, the largest increases areexpected for North America – mostly the United States – and WesternEurope.

“The projections for natural gas consumption in theindustrialized countries are for more rapid growth and a largershare of the total expected increase in energy consumption than areprojected for any other energy fuel” according to the report. “Gasuse is projected to grow by 2.4% per year in the industrialcountries,” compared with a rise in oil use of 1.1%. Natural gasuse will account for 49% of total energy use in these countriessaid EIA.

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

In North America, EIA reports that there is a “move toward anintegrated natural gas market. Cross border natural gas pipelinecapacity between the United States and its neighbors, Canada andMexico, is increasing, export/import activity is growing, andprices in the three countries are converging.”

According to the report, “pipeline capacity between the UnitedStates and Mexico has increased by 70% since 1998, from 1,150 Bcf/dto 1,970 Bcf/d.” Also, several additional projects have beenproposed and “may proceed if the trend of increased trade withMexico continues. Current plans include two El Paso Natural Gasprojects, one that will add 130 MMcf/d of capacity at theArizona/Mexico border and the other a project to increasecompression on the Samalyuca pipeline, which will add 60 MMcf/d atthe Texas/Mexico border.”

North America accounted for 5% of the world’s total natural gasproved reserves at the end of 1999 but it accounted for 31.8% ofthe world’s total production, “most of which was consumedinternally.” The U.S. production level of 23.2% was second only toRussia’s 23.7%, said the report, and Canada was third, accountingfor 7% of the total.

EIA calls LNG “a growing source of U.S. imports.” Citing “highernatural gas prices, reductions in the costs of producing andtransporting LNG, and the development of new sources,” the EIAreports that there is “renewed interest” in LNG, with plans byseveral 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 fourU.S. facilities is 840 Bcf/year, and their capacity could beexpanded.” While “LNG is not expected to become a major source ofU.S. gas supply, it does play an important role in regionalmarkets, including New England. Gross LNG imports are projected togrow from 90 Bcf in 1998 to 810 Bcf in 2020.”

The complete IEO report is available on EIA’s web site. For aprinted copy, available in April, call the EIA National EnergyInformation Center at (202) 586-8800.

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