These countries are likely to lead natural gas demand growth, EIA saysDavid Wagman | October 28, 2019
The U.S. Energy Information Administration (EIA) said that future growth in natural gas consumption is likely to be concentrated in developing nations — those outside of the Organization for Economic Cooperation and Development (OECD) — especially in non-OECD Asian countries that include China, India, Bangladesh, Thailand and Vietnam.
Annual natural gas consumption in non-OECD Asia is forecast to reach 120 billion cubic feet per day (Bcf/d) by 2050, outpacing regional production by 50 Bcf/d. This supply imbalance is expected to widen through the projection period, resulting in non-OECD Asia’s increasing reliance on natural gas imports from other regions such as the U.S.
The predictions came as part of the EIA's International Energy Outlook.
In June, the International Energy Agency (IEA) said that demand for natural gas grew 4.6% in 2018, its fastest annual pace since 2010. Gas accounted for almost half the increase in primary energy consumption worldwide. Demand is expected to grow by more than 10% over the next five years, IEA said, reaching more than 4.3 trillion cubic meters in 2024.
China is expected to account for more than 40% of global gas demand growth to 2024, driven by the government’s goal of improving air quality by shifting away from coal. Chinese natural gas consumption grew 18% in 2018 and is forecast to slow to an average annual rate of 8% to 2024 due to slower economic growth.
The IEA also forecasts strong growth in gas consumption in other Asian countries, particularly in South Asia. In Bangladesh, India and Pakistan, the industrial sector is the main contributor to growth, especially for fertilizers.
Supplies of natural gas will come from both new domestic production in fast-growing economies but also increasingly from major exporting countries, led by the development of shale gas resources in the United States, IEA said.
It reported that investment in LNG projects globally rebounded in 2018 after several years of decline. The large number of projects due to take final investment decision in 2019 is likely to further support trade and market expansion.
Natural gas exports
For example, Cheniere Energy said in early September that crews from general contractor Bechtel had completed the startup process for the second train of its Corpus Christi, Texas, liquefied natural gas production (LNG) unit.
Cheniere now has seven LNG production lines in operation, including five at its Sabine Pass export terminal in Louisiana and two at its Corpus Christi location.
And also in September, Freeport LNG shipped the first LNG commissioning cargo for Train 1 from its LNG facility located in Freeport, Texas. Roughly 150,000 cubic meters of LNG were loaded aboard the LNG Jurojin. Freeport’s Train 2 is aiming to achieve an in-service date of January 2020. Train 3 is nearing completion and could enter service in May 2020.
The Freeport terminal began to import LNG at the facility in June 2008. At the time, it was expected that the U.S. would become a net importer of natural gas. Hydraulic fracturing techniques reversed the decline in domestic natural gas production and led to the construction of multiple LNG export facilities, including those of Cheniere Energy and Freeport.
LNG is natural gas that has been cooled to a liquid state, at about -260° F, for shipping and storage. The volume of natural gas in its liquid state is about 600 times smaller than its volume in its gaseous state. The process was developed in the 19th century and makes it possible to transport natural gas to places pipelines do not reach and to use natural gas as a transportation fuel.
Most LNG is transported by large ships/tankers called LNG carriers in onboard, super-cooled (cryogenic) tanks. LNG is also transported in relatively small volumes on ships using International Organization for Standardization (ISO)-compliant containers and on trucks. At import facilities, LNG is typically stored onsite in special cryogenic storage tanks before regasification and input into pipelines that transport regasified LNG to consumers.
In its demand forecast, EIA said that non-OECD Asian countries account for almost half of projected global natural gas consumption growth from 2018 through 2050. Natural gas consumption in non-OECD Asia is largely driven by increased economic activity stemming from higher levels of consumer demand and industrial output.
China continues to be the largest natural gas consumer in non-OECD Asia: in 2050, EIA said it expects that China will consume nearly three times as much natural gas as it did in 2018. China’s projected increase in consumption is greater than the combined growth of natural gas consumption in all other non-OECD Asian countries.
EIA projects comparatively less natural gas demand growth in the developed economies of OECD Asia (Australia, Japan, New Zealand and South Korea). EIA said it expects that natural gas consumption in Japan — currently the largest natural gas consumer in this group — will "decrease slightly" by 2050. OECD Asian countries are generally characterized as service-based economies with lower projected rates of population growth.
EIA said that it expects natural gas consumption increases in China because of growth in the country’s electric power sector. This growth will result from both increased demand for electricity and from natural gas-fired power generation that displaces coal-fired units. Natural gas consumption in China’s power generation sector is forecast to increase by a factor of four to reach 7.3 quadrillion British thermal units (Btu) in 2050.
Energy-intensive urban areas such as the Beijing-Tianjin-Hebei metropolitan area and northeast China will favor natural gas-fired power generating units and other sources of electricity that result in less air pollution compared with coal-fired units.
China’s transportation sector will also contribute to growth in natural gas consumption in the EIA forecast, driven mostly by increased natural gas demand in truck and rail freight transport. According to this view, natural gas consumption in China’s transportation sector will grow from less than 1 quadrillion Btu in 2018 to nearly 6 quadrillion Btu in 2050.
Increasing demand for natural gas in India is related to its increasing production of goods. Natural gas use in India’s industrial sector is expected to surpass China’s industrial sector after 2040 and it will reach 6 quadrillion Btu by 2050. EIA said it expects India’s energy-intensive manufacturing to grow, especially the production of iron and steel, non-metallic minerals and basic chemicals. Other countries in non-OECD Asia, such as Bangladesh, Thailand and Vietnam, are expected to experience a 30% increase in natural gas demand between 2018 and 2050 as a result of increased manufacturing.