Gas demand expected to grow in non-OECD states
Long-term gas demand will grow mostly in non-OECD countries with China and India showing the most impressive growth
rates and the Middle East having the largest incremental growth, according to an International Energy Agency
Hideomi Ito, Natural Gas Analyst with the IEA, said that the OECD Europe gas demand would grow only by 0.8 % per year over 2007-30. Limited demand growth in the medium term in OECD countries will also affect gas demand, he said.
He told a fertilizer convention in Dubai that economic recovery and requirements from power generators are two major
uncertainties determining the long-term gas demand. He said that gas would be increasingly used to back up wind,
implying need for flexibility in transmission and storage.
Ito explained that China's gas demand has been increasing by 10 bn cmpd over the past years. China consumed 89 bn cm in 2009, close to UK or Germany's gas demand and demand increasing by over 20 % in H1 2010. Chinese companies see demand reaching 200 bn cm by 2020.
China has been investing to secure new supplies and improving distribution network in addition to implementing plans
to boost domestic gas production, he said. India's gas demand increased by 38 % to 59 bn cm in 2009, Ito said. By
2013, China and India will have a combined LNG import capacity of 65 bn cm, roughly what Europe imported in 2009, he
The IEA expert said that unconventional gas will be a global game changer. One way to define unconventional gas is as natural gas that cannot be produced at economic flow rates nor in economic volumes of natural gas unless the well is stimulated by a large hydraulic fracture treatment, a horizontal wellbore, or by using multilateral wellbores or some other technique to expose more of the reservoir to the wellbore.
Ito said that growth of the US unconventional gas has had regional and international consequences. The regional
consequences included low utilisation of US LNG terminals and change in investments.
The global consequences included drop in spot prices due to aggravation of oversupply, more LNG being available for other markets such as Europe and Asia, LNG projects targeting the US being discouraged, and increasing interest for unconventional gas in importing countries, but also in major producing/exporting countries as well. He said that the potential of unconventional resources is still poorly mapped and quantified even in the US. It is difficult to apply the same methodology as for conventional gas.
There are also uncertainties on how much of this gas is actually recoverable. The success of unconventional gas will
depend on the identification of the location and potential of the best areas, availability of rigs and engineers,
acceptance by local communities and landowners, resolution of environmental issues such as water management, and the
possibility to link to existing pipeline infrastructure, Ito pointed out.
Once some potential has been identified, public support and environmental regulations will be the key, he said.