Global natural gas consumption
From 2010 to 2011, global natural gas consumption increased by 3.1%. Except for North America, where low gas prices led to an increase in consumption, the increase in natural gas consumption in other regions was lower than the world average. Among them, China (21.5%), Saudi Arabia (13.2%) and Japan (11.6%) contributed the highest increase. Natural gas consumption in Europe and Eurasia declined due to a weak economy, rising gas prices, rising temperatures and continued growth in renewable electricity generation (BP2012a), which offset some of the increases elsewhere.
In the past 10 years, the global natural gas demand has gradually increased at an annual rate of 800 billion m3 (28.25 trillion) or 2.7%. In the global primary energy mix, natural gas accounts for 21%, second only to oil and coal (OECD/IEA2012).
Forecast to 2035
It is predicted that global natural gas consumption will increase by 52% between 2008 and 2035, from 111 trillion in 2008 to 169 trillion in 2035. While the global recession is expected to reduce natural gas consumption by $2.0 trillion in 2009, demand will rebound in 2010, with consumption re-surpassing pre-decline levels that year. Consumption in non-OECD regions is increasing steadily and will exceed that in OECD regions by almost 50% by 2035 (ElA-IEO 2011).
ExxonMobil (ExxonMobil) research shows that by 2040, natural gas will be the main fuel with the fastest growth in demand, and its growth rate will exceed 60%, and the growth trend is shown in Figure 1 (ExxonMobil 2012).
According to BP analysis (BP2012), the annual growth rate of global natural gas demand is expected to reach 2.1%. Global demand for natural gas will grow by 2030, with non-OECD countries accounting for 80% of the increase, with an average annual growth rate of 2.9%. Most notably, the demand for natural gas in non-OECD countries in Asia will grow the most rapidly, with an annual growth rate of 4.6%. In the next 30 years, its demand will increase by three times the current level. In addition, the annual growth rate of natural gas demand in the Middle East will also reach a higher 3.7%. China’s natural gas demand has also risen rapidly at an annual growth rate of 7.6%. By 2030, the demand will reach 46 billion m2/day, which is equivalent to the demand level of the entire EU in 2010. Currently 23% of global natural gas demand growth comes from China. Not only that, the proportion of natural gas in China’s primary energy consumption will expand from 4.0% to 9.5%. In the Middle East, this proportion will also increase significantly (BP2012, ExxonMobil, 2012).
Because natural gas is a versatile fuel, the factors driving the growth of natural gas demand vary in different regions. But in many parts of the world, natural gas is still used as a fuel for power generation and industry. Consistent with historical patterns, the two fastest-growing sectors of global natural gas demand are power generation and industry, with annual growth rates of 2.4% and 2.1%, respectively. Natural gas is favored in the power generation field because of its low investment cost, high thermal efficiency, and lower carbon emission intensity than coal and oil. Among them, the CO2 emission of natural gas is 60% less than that of coal. In 2030, natural gas consumption in the transportation sector will quadruple current demand, but account for less than 2% of total global demand. In OECD countries, natural gas demand growth is concentrated in the power generation sector, with an annual growth rate of 1.6%. Improvements in utilization efficiency and slowing population growth have kept the annual growth rate of natural gas demand in the industrial sector at a sluggish 0.9%, and the annual growth rate in other sectors is even lower than 0.1%. In non-OECD countries, industrialization, the development of power generation and domestic resources have stimulated the increase in natural gas demand. Among them, the consumption of natural gas in power generation and industry has grown the most, with an annual growth rate of 2.9% and 2.8% respectively (BP2012). By 2025, natural gas will replace coal as the second-largest fuel for electricity generation after oil. The United States, Russia, Iran and China are the world’s top four natural gas consumers (OECD/IEA 2013).
In North America, natural gas is more popular than coal in the power generation industry, especially driven by policies that impose high taxes and fees on high-carbon-emitting fuels. In the U.S., as unconventional natural gas production increases, natural gas supplies are sufficient to meet domestic demand for the foreseeable future. In China, the growth trend of natural gas demand in the industrial and residential/commercial sectors is different, the distribution lines supplying the latter are expanding rapidly, and natural gas is very competitive compared to liquefied petroleum gas (LPG). In India, about half of the growth in gas demand by 2040 will come from the industrial sector. In the Middle East, power generation and industrial demand are driving growth in natural gas demand (BP2012). On the other hand, there are also fuel substitution reasons for the growth in natural gas demand, especially in the OECD region where regulatory regimes have changed and related prices have been lowered. For example, in OECD countries, about half of the growth in demand for natural gas in power generation comes as a substitute for other fuels, and 75% in industry. In non-OECD countries, the impact of fuel substitution is less pronounced, as rapidly expanding energy demand presents equally good opportunities for all types of fuels (BP, 2012). The strong competitiveness of natural gas among other energy sources comes from the prospect of rapid growth in natural gas reserves and supplies. Significant changes have occurred in natural gas supply and global markets as LNG production capacity increases. The latest drilling techniques and efficiency enhancements have created economical gas production in many shale basins around the world, as the reader will read in subsequent chapters of this book. According to the International Energy Outlook 2011 (IEO2011) reference case assessment, the overall impact is a significant increase in the availability of natural gas, which in turn leads to lower natural gas prices and increased consumption (ElA-IEO2011).
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