Current and Future Supply and Demand of Natural Gas essay

  • Length: 10 pages
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  • Subject: Energy
  • Type: essay
  • Paper: #92383692

Excerpt from essay :

Future Supply and Demand of Natural Gas

The technology developed in the United States has become available for application in other countries mainly through efforts of major service companies. Until the mid 1990s, Canada's gas production was predominantly from conventional gas formations. This conventional gas filled the available pipeline capacity and unconventional gas resources, which are more difficult to produce, were largely ignored. However, as pipeline capacity was expended and conventional gas production began approaching a peak, market conditions in Canada began to favor development of unconventional gas (Harry, pp88-96) In the recent past, the natural gas markets were fairly predictable; they are now undergoing profound and uncertain changes. Independently, each regional market had developed gradually deposits from the nearest pipeline networks and limiting exchanges between areas. The current trend is marked by greater competition between the available sources and greater flexibility in systems gas. (Tad, pp14-15)

It is apparent that technological innovations and improvements have played an important role in increasing unconventional natural gas development in North America. This technology, advanced over the past three to four decades, promises to become a worldwide commodity through efforts of many service companies. China, with its sizable unconventional natural gas potential, has every prospect of success to repeat the experience of the U.S. And Canada in adopting new technologies. The issue of energy security and vulnerability is currently of more concern to global economies than it has ever been before. As demand grows, energy resources become strategic commodities susceptible to being used for geopolitical leverage. The growing influence of geopolitical factors on the global energy market has profound implications for the interests, strategies, and policy-making of nations as well as for the ways that oil and natural gas companies conduct their business. (Wengenmayr and Thomas, pp42-43)


The main producing countries in 2006 were the Russian Federation and the United States with 21.3% respectively and 18.5% of world production. Note that North America and the former Soviet Union produced 53.6% of total production in 2006. Other states also show a significant production. This is the case, for example, Canada (6.5%), Iran (3.7%), Norway (3%), Algeria (2.9%), UK (2.8%), Indonesia (2.6%), Saudi Arabia (2.6%) and Netherlands (2.2%) *. These ten countries accounted for two thirds of world production of natural gas in 2006. (Tad, pp14-15)

Total world production in 2006 was 2.865 trillion cubic meters, an increase of 3% over the previous year. An increased production of natural gas worldwide is expected due to exploration projects and expansion planned in anticipation of future demand upward.

The main consumer of natural gas in 2006 was the United States with 22% of total consumption and the Russian Federation, with 15.1%. North America and the former Soviet Union together consumed about 49% of natural gas. (Douglas and Marek, pp117-28)

The share of Europe (EU 25) in the total consumption of natural gas was 16.3%. These three areas accounted alone for nearly two-thirds of total consumption in 2006. The consumption growth was 2.5% between 2005 and 2006, with rates highest in Asia / Pacific (6.5%) and Africa (5.5%). The main energy agencies worldwide provide a significant increase in demand around the world over the next twenty years; growth should mainly take place in developing countries. (Tad, pp14-15)


Since the 70s, natural gas is the primary energy in fashion, one whose rate annual growth is the highest sustainable worldwide (2.5% per year). Its main outlet is power generation with gas turbine combined cycle considered as one of the cheapest technology. (Kemp, pp4-9) Due to physical constraints pipelines global market did not exist but several regional markets coexisted with their own dynamics of supply, demand and prices: in North America, Europe and Asia. Indeed, the rigidity and cost of transporting gas resulted necessarily a fixed link between the field and the end user. Since transport is 7-10 times more expensive than oil, the sustainability of demand for gas would be and ensured financial and technical risks were taken. (Tad, pp14-15) The liquefaction was then allowed transport gas over long distances at low cost compared to gas pipelines, thereby allowing greater diversification of suppliers. Gradually, the natural gas markets were transformed with the revolution of the impression of a LNG creation of a world market and growth of spot markets. Little-used energy source until the oil shocks, natural gas was of interest lower compared to other fossil fuel: difficult to transport, less energy as coal, dangerous to handle, heavy investment and it was often hard flared. (Marriot, pp33-48)

Its operation is recent, its reserves, still poorly understood, are already abundant. In 2008, they represented 60 years of consumption and were concentrated to 40% in the Middle East. It should be noted that three countries held more than 50% of the world: Russia (27%), Iran (15%) and Qatar (14%). (Robert, pp1-3)With the evolution technology, mapping changes at the whim of unconventional gas discoveries leading to a reassessment of reserves from 60 to 250% depending on the area. (Ammann, pp16-38)

This year, United States became the first producers downgrading Russia, which nevertheless remains the leader in terms of exports. Russia still retains a strategic in the geopolitics of natural gas reserves and due to its geographical position, but perhaps for a shorter period than expected. (Viscusi et al. pp102-06) In 2009, natural gas accounted for a quarter of world energy consumption, against 36% for oil. Driven by electricity generation, the growth in demand gas is higher in non-OECD countries in the Middle East and Asia. (Wengenmayr and Thomas, pp42-43) Today the United States (23%) and Russia (15%) remain by far the two big countries gas consumers. North America is the largest natural gas market with a third of the world consumption which comes largely from his home production. The gas occupies a strategic place in the U.S. particularly in the electricity mix, which he is second fuel strong growth. To meet this rising demand, the National production should continue to play a major role, but an increased emphasis was scheduled for LNG with many terminal projects. From 2008, the forecast LNG imports from U.S. Department of Energy have been revised downwards with a 3% share in the supply in 2020 against 16% in 2008. (Douglas and Marek, pp117-28)

The effects of unconventional gas discoveries began in effect to appear on the market North American. Between 2003 and 2008, natural gas prices in the U.S. rose to 35 € / MWh. The exploitation of unconventional gas date from 2006-2007 during the high prices and development of new drilling techniques. Since 2008, half of the gas consumed in the U.S. comes from unconventional gas. Improved techniques fracturing of wells and the use of horizontal drilling technologies enable the recover gas trapped in geological formations such as shale. (Kemp, pp4-9)

Inconceivable a few years ago at the time when the United States was considering able to import gas from Russia, the findings bring this country to self-sufficient, or even consider being a net exporter, resulting in lower prices sustainable gas in the area. If it turns out that the unconventional gas is economically recoverable in North America, reserves could be multiplied by six. (Marriot, pp33-48)

Demand and supply

The total energy demand for end use slows from 1.4% per year between 1990 and 2008 to 1.3% per year over the study period. Despite the modest slowdown in global growth in demand, a further review of the results indicates a decline in many key determinants of energy demand. Among them, there is a slowdown in population growth, higher prices of energy, lower economic growth in past years and enhanced programs in energy efficiency and energy saving. (David, pp19-46) Compared to historical growth rates, growth in energy demand in the commercial and transport slows dramatically. In regard to the commercial sector, the average annual growth rate of its historic fall from 2.0% to 1.0% during the period analyzed, while the transport sector flexes from 1.9% to 1.4%. (Douglas and Marek, pp117-28)

Moreover, under the leadership of federal and provincial programs, there is a significant breakthrough biodiesel and ethanol in the sector. The growth in demand in the residential sector fell by 0.7% per year it was from 1990 to 2008 to 0.6% from 2010 to 2035. The industrial sector, which accounted for nearly half of energy demand in 2010, stands apart, since it was up. (Robert, pp1-3) The sustained growth of many industries neutralizes the decrease in energy intensity that knows this area during the study period. Energy demand in the industrial sector increased at an annual rate of 1.6% during the study period, compared to 1.2% during the reference period, from 1990 to 2008. (Ammann, pp16-38)

Emerging trends related to supply and energy demand will have a significant impact on trade and energy needs of new infrastructure. Growth of oil production from the oil sands and a modest growth in demand for petroleum products will be effectively triple the net supply of crude oil available for export by 2035. Meanwhile, it is expected…

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