The United States will account for 40% of the world’s extra gas production by 2022 thanks to the growth in its domestic shale industry. This according to the new report from the IEA Market Report Series: Gas 2017 . By 2022 the IEA estimates that the United States will be on course to challenge Australia and Qatar for global leadership among LNG exporters.
By 2022, U.S. production will be 890 bcm, or more than a fifth of global gas output according to the IEA’s analysis and five-year forecast on natural gas. Production from the Marcellus region in the U.S. will increase by 45% between 2016 and 2022. The report noted producers will increase efficiency and produce more gas with fewer rigs. US domestic demand for gas will grow because of higher consumption from the industrial sector. More than half of the U.S. production increase will be used for LNG exports according to the report.
Global gas demand is expected to grow by 1.6% a year for the next five years, with consumption reaching almost 4,000 billion cubic meters (bcm) by 2022, up from 3,630 bcm in 2016. China will account for 40% of this growth.
“The US shale revolution shows no sign of running out of steam and its effects are now amplified by a second revolution of rising LNG supplies,” said Dr Fatih Birol, the IEA’s Executive Director. “Also, the rising number of LNG consuming countries, from 15 in 2005 to 39 this year, shows that LNG attracts many new customers, especially in the emerging world. However, whether these countries remain long-term consumers or opportunistic buyers will depend on price competition.”
The ample availability of LNG is creating new competition with pipeline gas supplies which could benefit consumers. The competition is loosening pricing and contractual rigidities that have traditionally characterized long-distance gas trade. The change will be accelerated by the expansion of US exports, which are not tied to any destination and will play a major role in increasing the liquidity and flexibility of LNG trade according to the report.
Europe could see growing competition between LNG imports and pipeline gas as domestic production declines creating extra uncertainty on the sources of future supply. The recent standoff involving Qatar, which supplies about a third of the world’s LNG, and neighboring countries has also underscored potential risks to gas supply security. “Even in a well-supplied market, recent events remind us that gas security remains a critical issue.” said Dr Birol.
The new Market Report Series: Gas 2017 is available for purchase here .