Gastech 2018: Natural gas, LNG utilisation projected to keep rising till 2040

The outlook for gas looks bright. World Energy Outlook 2017 published by the International Energy Agency (IEA) predicts that the consumption of natural gas will keep rising up till 2040. In the case of LNG, trading is growing, driven by the new liquefaction capacity in the US and Australia, regasification growth in new non-OECD markets and a greater proportion of floating solutions.

Natural gas is well placed in the future global energy scene and will have a positive contribution to the energy mix, the International Energy Agency said at Gastech. Wood Mackenzie recently upgraded its forecast of the LNG supply-demand gap for new projects.

Speakers at Gastech examined the global drive towards the greater adoption of gas and LNG, and the industry’s optimism of further long-term growth.

The Gastech plenary began with a keynote address from Jean-Baptiste Dubreil, Senior Natural Gas Analyst, International Energy Agency, who spoke of the growth opportunities in the industry from the US, China and industry demand.

Dubreuil highlighted the demand and supply outlook for natural gas and pointed out the advantages and challenges in the path of what he called is a bright future for natural gas.

“We have seen a very positive trend and growth over the recent past and looking forward, we assume that this growth is going to persist in the medium to long-term,” Dubreuil said.

Three main factors will drive growth in gas markets in the near-term future. These include China entering the global gas scene as a major source of consumption growth.

“We do anticipate that China will become the first natural gas importing country as soon as next year,” he said. The second factor is the US emerging as a major source of production growth and export growth through its LNG liquefaction development growth.

Third is the shift in assets consumption moving from a demand growth, which was traditionally driven by power generation to demand growth driven by industry especially in emerging markets.

“The future of natural gas seems bright yet not without challenges. Those challenges of natural gas will conquer new markets, especially in emerging markets is to remain competitive, not only in terms of price competitive to compete with other sources of energy but also to prove its contribution to a cleaner and more sustainable energy environment, especially with dealing with curbing methane leaks throughout the value chain,” Dubreuil said.

Last year, natural gas demand growth doubled, driven by the emerging Asian market, mainly China, on back of strong economic growth and a strong policy push to shift from coal to gas for small industrial boilers and residential appliances in major cities, he said, adding that power generation is another main engine of growth. Aside from China, IEA expects growth from other regions. Resource-rich regions like the Middle East or North America are being driven not just for domestic but also export purposes, with the growth of petrochemicals and fertiliser industries, he said, adding that he also sees growth in other emerging regions such as India, Africa and Latin America.

This growth will be met by additional production. US is expected to account for 40 per cent of additional production in the next five years, according to IEA. “This will come from the second phase of the shale oil and gas boom, being turned out to export fuel out of the LNG liquefaction capacity,” he said.

Other significant sources of growth will come from the Middle East, China, Australia and Russia, with Egypt being the main source of growth of production from the African market. In most cases, production is aimed at domestic markets. Climate change will also play an important role in growth for natural gas demand.

“This is an ever-growing complex world, marked by environmental challenges. CO2 emissions have been relentlessly growing ever since the beginning of this century. This calls for immediate action for countries to achieve a long-term energy efficiency goal and natural gas can be part of this answer towards a more environment friendly energy mix,” Dubreuil said.

Other themes discussed included the new demand centres for gas, the interplay between gas and renewable energy in power generation, project development, managing emissions and project financial risk management.

FRANK UZUEGBUNAM