Asia will represent the “lion’s share” of natural gas demand growth in the coming years, Royal Dutch Shell plc’s Marvin Odum, director of the company’s America’s upstream business, told a Washington, DC, audience last week.

“Much of the foreseeable growth in energy demand will come from Asia. Roughly half of the demand increase will come from China and India, with the majority of that from China. Southeast Asia, traditionally an energy exporting region, also expects to double its energy demand in that time horizon,” Odum said at the Canadian American Business Council Spring Policy Forum.

“And by 2030, Chinese demand could be more than one-and-a-half times as high as the next-largest energy consumer: the United States.”

A few years ago China’s energy thirst would have struck fear in the hearts of North American political and business interests. But now that Canada and the United States have something to sell — namely shale gas — Asia’s demand growth represents an opportunity rather than a threat.

“LNG [liquefied natural gas] exports to Asia can open a market for North America — and especially Canada — worth billions of dollars,” Odum said. “It could sustain investments, jobs and provide long-term income through royalties and taxes here, while helping China and the rest of emerging Asia secure a lower-carbon energy future there.”

The International Energy Agency recently said that over the next five years China will more than double its natural gas consumption, while low gas prices will continue to support the U.S. economy and the United States becomes a net exporter of LNG (see Daily GPI, June 6).

“It’s true that coal still drives much of their energy growth today; but Chinese leaders are famous for taking the long view,” Odum said. “They know they need cleaner, more sustainable ways to fuel their continued economic growth. They are making capital investments and policy decisions to that end. An important example of that — important especially for Canadian and American leaders — is China’s focus on natural gas…a cleaner option to almost any other energy source available at scale today.”

Odum said Shell executives expect China to drive 50% of the world’s growth in gas demand during the period until 2020. “To meet these demand projections, China is looking to expand its domestic natural gas production and import natural gas by pipeline from the Caspian region. But it will also need liquefied natural gas — or LNG — imported from even further abroad.”

Demand for LNG across Asia is likely to grow by more than 80 million metric tons per year between now and 2020, Odum said. “This is equivalent to another Japan, which imported a record 83 million metric tones of LNG in 2011, following the tragedy at the Fukushima nuclear plant.

“What’s even more significant is that most of that growth is for commercial, industrial and residential needs. When China decides to ramp up construction of natural gas power plants, the number could be really eye-popping.”

Asia is looking to North America to help meet its demand, and North American energy interests are working to answer the call. Alberta and British Columbia alone are probably sitting on more than 200 Tcf of competitive natural gas, Odum said. Natural gas production from tight shale and sandstone in the United States and Canada nearly doubled between 2005 and 2010.

But others are working to meet Asian gas demand, notably Australia, Odum said. “Australia already exports around 26 [million metric tons per year (mtpa)] of LNG to Asia, and the Aussies have plans on the table for up to 80 mtpa [see Daily GPI, March 8]. Countries like Malaysia, Indonesia and Qatar are developing opportunities for their own natural resources and have the advantage of being just around the corner from the Chinese market. So even as long-term global demand for energy will skyrocket, we’re seeing intense competition and a short window of opportunity now in key energy markets.”

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