Golden Age of Gas Report.ppt

ARE WE ENTERINGA GOLDEN AGE OF GAS?,SpecialReport,WORLDENERGYOUTLOOK,2011,INTERNATIONAL ENERGY AGENCY,The International Energy Agency(IEA),an autonomous agency,was established in November 1974.,Its primary mandate was and is two-fold:to promote energy security amongst its member,countries through collective response to physical disruptions in oil supply,and provide authoritative,research and analysis on ways to ensure reliable,affordable and clean energy for its 28 member,countries and beyond.The IEA carries out a comprehensive programme of energy co-operation among,its member countries,each of which is obliged to hold oil stocks equivalent to 90 days of its net imports.,The Agencys aims include the following objectives:,Secure member countries access to reliable and ample supplies of all forms of energy;in particular,through maintaining effective emergency response capabilities in case of oil supply disruptions.,Promote sustainable energy policies that spur economic growth and environmental protection,in a global context particularly in terms of reducing greenhouse-gas emissions that contribute,to climate change.,Improve transparency of international markets through collection and analysis ofenergy data.Support global collaboration on energy technology to secure future energy suppliesand mitigate their environmental impact,including through improved energyefciency and development and deployment of low-carbon technologies.Find solutions to global energy challenges through engagement anddialogue with non-member countries,industry,international,organisations and other stakeholders.,IEA member countries:,AustraliaAustriaBelgiumCanadaCzech RepublicDenmarkFinlandFranceGermanyGreeceHungaryIrelandItalyJapanKorea(Republic of)LuxembourgNetherlandsNew ZealandNorwayPolandPortugal,OECD/IEA,2011,Slovak Republic,International Energy Agency,Spain,9 rue de la Fdration,Sweden,75739 Paris Cedex 15,France,Switzerland,www.iea.orgPlease note that this publicationis subject to specific restrictionsthat limit its use and distribution.The terms and conditions are available,TurkeyUnited KingdomUnited StatesThe European Commissionalso participates in,online at www.iea.org/about/copyright.asp,the work of the IEA.,OECD/IEA,2011,3,Acknowledgements,This report was prepared by the Office of the Chief Economist(OCE)of the International,Energy Agency.It was designed and directed by Fatih Birol,Chief Economist of the IEA,and,the analysis was co-ordinated by John Corben.Principal contributors to this report were,Maria Argiri,Marco Baroni,Anne-Sophie Corbeau,Laura Cozzi,Ian Cronshaw,Dan,Dorner,Matthew Frank,Timur Gl,Pawe Olejarnik,Timur Topalgoekceli,Peter Wood,David Wilkinson and Akira Yanagisawa.Other contributors included Prasoon Agarwal,Christian Besson,Amos Bromhead,Raffaella Centurelli,Dafydd Elis,Tim Gould and Kate,Kumaria.Sandra Mooney provided essential support.,Robert Priddle carried editorial responsibility.,The report benefited from valuable comments and feedback from other experts within the,IEA,including Bo Diczfalusy,Didier Houssin,Jonathan Sinton and Laszlo Varro.Jane,Barbiere,Muriel Custodio,Rebecca Gaghen,Anne Mayne and Bertrand Sadin were,essential in readying the report for production.Thanks also go to Debra Justus for,proofreading the text.,The work was made possible by the support and co-operation of many government bodies,international organisations and energy companies worldwide,notably:Edison;Energy,Studies Institute,Singapore;Eni;Fortum;The Japan Gas Association;The Ministry of,Economic Affairs,Agriculture and Innovation,the Netherlands;The Ministry of Petroleum,and Energy,Norway;Schlumberger;Shell and Statoil.,Many experts from outside the IEA provided input,commented on the underlying analytical,work and reviewed the report.Their comments and suggestions were of great value.They,include:,Marco Arcelli,Enel,Georg Baeuml,Volkswagen,Carmen Becerril,Acciona Energia,Kamel Bennaceur,Schlumberger,Alexey Biteryakov,GazpromExport,Carey Bylin,Environmental Protection Agency,United States,Guy Caruso,Center for Strategic and International Studies,United States,Tilaklal Doshi,Energy Studies Institute,Singapore,Rafa Frc,Permanent Delegation of Poland to the OECD,Masazumi Hirono,Japan Gas Association,James Jensen,Jensen Associates,Jostein Karlsen,Ministry of Petroleum and Energy,Norway,Ken Koyama,Institute of Energy Economics,Japan,Oleg Maximov,Troika Dialog,Russian Federation,Klaus Mohn,Statoil,Ernest Moniz,Massachusetts Institute of Technology,United States,Acknowledgements,OECD/IEA,2011,4,Trevor Morgan,Menecon Consulting,Roberto Pot,Edison,Dinko Raytchev,EC-DG Energy,Howard Rogers,Oxford Institute for Energy Studies,United Kingdom,Alain Sanglerat,GDF Suez,Michael Stoppard,IHS CERA,Wim Thomas,Shell,Umberto Vergine,Eni,Frank Verrastro,Center for Strategic and International Studies,United States,Graham Weale,RWE,The individuals and organisations that contributed to this study are not responsible for any,opinions or judgements it contains.Any errors or omissions are solely the responsibility of,the IEA.,World Energy Outlook 2011|Special Report,OECD/IEA,2011,5,Table of contents,Summary.7,Introduction.11,Section 1:,The Golden Age of Gas Scenario.13,Building the scenario.14Primary demand.19Gas production.25Inter-regional gas trade.31Investment in gas production and transportation.35Energy-related emissions.37Implications of the GAS Scenario.41,Section 2:,The potential to expand gas supply.45,Preconditions for the development of gas supplies.46The gas resource base.48Global supply trends.53The global potential of unconventional gas.57Environmental impact of gas production and transport.60Expanding inter-regional transportation capacity.66Pricing mechanisms and prices.72,Section 3:,Will demand for gas keep pace with supply?.81,Factors driving demand for natural gas.82Determination of fuel choices in key sectors.87Emerging trends as an indicator of future gas demand.100,Section 4:,Taking stock of future uncertainties.103,Projected gas demand in WEO-2010 New Policies Scenario.104Sensitivity analysis of gas demand.107Accounting for high-impact,low-probability events.111,Annex A:,Units and conversion factors.123,Annex B:,References.125,Table of Contents,OECD/IEA,2011,OECD/IEA,2011,Summary,The factors that drive natural gas demand and supply increasingly point to a future in,which natural gas plays a greater role in the global energy mix.Global uncertainties,afflicting the energy sector can be seen as opportunities for natural gas.When replacing,other fossil-fuels,natural gas can lead to lower emissions of greenhouse gases and local,pollutants.It can help to diversify energy supply,and so improve energy security.It can,provide the flexibility and back-up capacity needed as more variable capacity comes on-,line in power generation.Gas is a particularly attractive fuel for regions,such as China,India and the Middle East,which are urbanising and seeking to satisfy rapid growth in,energy demand.These are the very regions that will largely determine the extent to which,gas use expands over the next quarter of a century.,The global natural gas resource base is vast and widely dispersed geographically.,Conventional recoverable resources are equivalent to more than 120 years of current,global consumption,while total recoverable resources could sustain todays production for,over 250 years.All major regions have recoverable resources equal to at least 75 years of,current consumption.Timely and successful development depends on a complex set of,factors,including policy choices,technological capability and market conditions.Once,discovered,major gas resources can sometimes take several decades to reach production.,Unconventional natural gas resources are now estimated to be as large as conventional,resources.Unconventional gas now makes up about 60%of marketed production in the,United States.Coalbed methane(CBM)development is growing in Australia,while projects,in China,India and Indonesia are in the early stages of development.Use of hydraulic,fracturing in unconventional gas production has raised serious environmental concerns and,tested existing regulatory regimes.Based on available data,we estimate that shale gas,produced to proper standards of environmental responsibility has slightly higher“well-to-,burner”emissions than conventional gas,with the combustion of gas being the dominant,source of emissions.Best practice in production,effectively monitored and regulated,can,mitigate other potential environmental risks,such as excessive water use,contamination,and disposal.,The Golden Age of Gas Scenario(GAS Scenario),departing from the WEO-2010 New,Policies Scenario our base case incorporates a combination of new assumptions that,underpin a more positive future outlook for gas.These are implementation by China of an,ambitious policy for gas use,lower growth of nuclear power and more use of natural gas in,road transport.Ample availability of gas,much of it unconventional gas,keeps average gas,prices below the levels assumed in WEO-2010.,The main findings and implications of the GAS Scenario are:,Global primary gas demand reaches 5.1 trillion cubic metres(tcm)in 2035 1.8 tcm,more than today and nearly 0.6 tcm more than in the WEO-2010 New Policies,Scenario in 2035.The share of natural gas in the global energy mix increases from 21%,to 25%in 2035,pushing the share of coal into decline and overtaking it by 2030.While,gas demand expands in all regions,non-OECD countries account for nearly 80%of the,total increase between 2010 and 2035,placing a premium on their adoption of,efficient gas-fired technologies.Chinas gas demand rises from about the level of,Summary,7,OECD/IEA,2011,8,Germany in 2010 to match that of the entire European Union in 2035.Middle East,demand almost doubles,to a level similar to Chinas in 2035,and demand in India in,2035 is four times that of today.Power generation remains the dominant sector for,gas demand and,in the GAS Scenario,gas replaces some coal in power generation in,China,India and the United States.There is also a broad-based increase in gas demand,growth,spanning the industry,transport and buildings sectors.,An increase in production equivalent to about three times the current production of,Russia will be required simply to meet the growth in gas demand in 2035.Global,natural gas resources can comfortably supply this demand and sustain supplies well,beyond.All regions have the potential to increase gas production and enhance overall,energy security.The largest existing producers are expected to meet much of the,increase in demand in the GAS Scenario,but they will be joined by China as it becomes,one of the worlds largest gas producers,although to satisfy rising domestic demand,imports will also needed.The strongest centres of growth in natural gas production are,expected to be the Middle East,Russia,Caspian,North America,China and Africa.,Conventional gas will continue to make up the greater part of global production,but,unconventional gas becomes increasingly important,meeting more than 40%of the,increase in demand.Most of the growth in unconventional gas occurs in North,America,China and Australia.The complex issues relating to unconventional gas,production mean that these projections,especially in regions where little or no such,production has been undertaken to date,are particularly subject to uncertainty.,Effective,transparent and stable regulatory frameworks are still needed in some,regions,particularly for unconventional gas.,Trade between the main world regions more than doubles,with the increase of,around 620 bcm split evenly between pipeline gas and liquefied natural gas(LNG).,Natural gas markets are becoming more global and regional prices are expected to,show signs of increased convergence,but the market does not become truly,globalised.North America will remain largely self-sufficient and is therefore likely to be,essentially isolated from inter-regional trade.China will grow to become one of the,largest importers of natural gas globally,as Russia and the Caspian region increasingly,export both west and east.,The different overall global energy mix in the GAS Scenario results in differences in,the required type and scale of energy-supply infrastructure.Cumulative investment in,gas-supply infrastructure amounts to around$8 trillion(12%higher than in the WEO-,2010 New Policies Scenario),but there is slightly reduced supply investment in other,fuels.In the near term,there is an urgent need to invest in LNG capacity in some,regions.,An increased share of natural gas in the global energy mix is far from enough on its,own to put us on a carbon emissions path consistent with an average global,temperature rise of no more than 2C.Natural gas displaces coal and to a lesser,extent oil,driving down emissions,but it also displaces some nuclear power,pushing,up emissions.Global energy-related CO2 emissions in 2035 are only slightly lower than,those in the New Policies Scenario,at around 35 Gt.This puts emissions on a long-term,trajectory consistent with stabilising the concentration of greenhouse gases in the,atmosphere at around 650 ppm,suggesting a long-term temperature rise of over,3.5C.To limit the increase in global temperature to 2C requires a greater shift to low-,World Energy Outlook 2011|Special Report,OECD/IEA,2011,carbon energy sources,increased efficiency in energy usage and new technologies,including carbon capture and storage.The GAS Scenario assumes that support for,renewables is maintained but,in a scenario in which gas is relatively cheap,there is a,risk that governments resolve in this respect might waiver,pushing gas demand even,higher than projected here.,The pricing of gas relative to other fuels has a strong influence on fuel choice.At the,price assumed in the GAS Scenario,rapidly increasing demand is fully met,but the,market progressively tightens and the gas glut identified in WEO-2010 disappears,before 2015.More gas production including significant quantities of unconventional,gas becomes available in several regions later in the Outlook period:our analysis,suggests that plentiful volumes of shale gas,tight gas and coalbed methane can be,produced at costs similar to those in North America(between$3-7 per MBtu).Despite,increasing international trade of gas in the GAS Scenario,demand and supply,developments within regions will remain influential in gas price formation.Steps to,make markets more responsive to natural gas fundamentals would improve overall,economic efficiency.Subsidies encouraging inefficient gas consumption are an,example of policies that can distort markets and reduce efficiency.Increased,consistency of regulatory and market regimes across borders will encourage,investment in inter-regional pipeline infrastructure and so facilitate trade and,competition.Ensuring sufficient gas storage will help dampen market volatility and,improve energy security.,Are we entering a golden age of gas?Natural