(Newswire.net — July 16, 2019) –While the demand for natural gas grew at an astonishing 4.6% in 2018, the International Energy Agency (IEA) warns that the current rate of growth is unsustainable. While the growth of last year’s demand was faster than any year since 2010, the IEA expects global demand to average 1.6% yearly growth until 2024. They also believe that growth in the short term will be filled by an increase in liquid natural gas (LNG) production.
The unexpected growth of the 2018 global market was caused by several factors, most notably a strengthening worldwide economy, erratic and shifting weather patterns, and the continuing transition of coal-generated electrical energy facilities into gas-powered ones. China and the United States were the main drivers of global demand as each saw significant growth in their natural gas consumption.
The IEA believes these factors to be short-term trends and cautions on expectations for the early half of the next decade. They have expressed the opinion that weather conditions will normalize during this period and that we have passed the peak of converting coal-fired power plants into natural gas run facilities. While they expect continued growth, the IEA expects a return to the 1.6% per annum growth experienced in 2017.
While China is expected to occupy at least 40% of the global demand in the coming years, an expected decrease in economic growth will similarly temper their natural gas demand. The surging growth of over 18% in 2018 should fall to 8% through 2024. The rest of the worldwide market is expected to see similar or larger reductions in their demand for natural gas.
Yet, it must be noted that while the global demand should fall off from the exuberant highs of 2018, growth will continue, and the growing demand must be met. The United States is uniquely positioned to do so. Expanding extraction of natural gas from oil shale and tar sands drove US production up in 2018 to its highest level since 1951. This rate of expansion is expected to continue for the foreseeable future and is expected to increase over the five-year time period as more shale sites are opened to extraction.
To meet the worldwide demand, most of this gas will be converted into liquefied natural gas (LNG) as it is much easier to transport than its gaseous counterpart. The IEA expects LNG from the United States and a handful of other global players to comprise upwards of 90% of the worldwide gas demand by 2024.
As LNG facilities increasingly come online in the United States, there is the possibility that the US could surpass Australia, Qatar, and Russia, which are the current world production leaders. However, both Australia and Russia are increasing their LNG production facilities, while Qatar has pledged to do the same; so, the worldwide leader is yet to be determined. What is not in question is that a dramatic increase in LNG production and transportation infrastructure will be needed to cover and outpace worldwide demand, even as market growth slows.
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