China is building import terminals
Because there is so much competition in the energy sector, gas production and demand rely on competitive pricing. IEA analysts say significant amounts of shale gas, tight gas and coal-bed methane can be produced at between $3 and $7 per million British thermal units. In the past few years, drillers have been able to produce gas out of the largest U.S. shale fields for costs at the lower end of that range.
Based on the high-production scenario, "from 2010 gas use will rise by more than 50 percent and account for over 50% and account for over 25% of world energy demand in 2035 -- surely a prospect to designate the Golden Age of Gas," said IEA.
China is a significant piece of the puzzle. According to IEA, China will be among the largest gas producers and buy more than half of its supply off the international market. Gas accounts for less than 3 percent of China's power generation today, but analysts expect that to steadily increase. Import terminals are under construction along China's coast, and higher prices and international cooperation are pushing up domestic production.
Coal dominates China's power sector, but the nation's 12th five-year plan encourages more gas use in the power sector, in part to help control carbon emissions.
"Higher gas usage will depend on sustained low gas prices, environmental regulation and sufficiency of supply, as well as developments in the coal sector," the analysts said about China. "Gas may also find a niche in the power sector in regions far from domestic coal supplies."
By 2035, IEA says, unconventional gas will be more than 40 percent of the global production increase, and growth will mainly be in North America, China and Australia.
Australia, which is the largest coal exporter, has been gearing up to produce and ship coal-bed methane. Indonesia is also starting to produce more gas. Those developments could feed demand in Asia.
Reprinted from Climatewire with permission from Environment & Energy Publishing, LLC. www.eenews.net, 202-628-6500