Whatever happened to the Golden Age of natural gas?

Abstract

Recent technology innovation in the natural gas industry has powered a shale gas boom, enabling the narrative that natural gas is a transition fuel to a low-carbon future. However, this narrative has not manifested itself uniformly around the world and, more fundamentally, it must be tested and revised periodically to reflect rapidly changing market, supply chain, and environmental realities. The growth in production has put downward pressure on prices, incentivized increased consumption and trade in the coming years, leading to the coming of age of the global market for liquefied natural gas (LNG). LNG from areas with high levels of production can increasingly respond to demand growth elsewhere; however, questions about infrastructure availability, competition with other energy sources, and end use blur our understanding about environmental outcomes. New markets for natural gas face new medium and long-term challenges through capital investments in long-term infrastructure which creates a risk of displacing lower carbon options and prolonging higher emitting facilities. We explore the narrative of natural gas as a transition fuel, and how it has thus far manifested itself in various key markets. The United States is our region of focus on the supply side due to the recent shale gas boom and emission reductions from the coal-to-gas transition in the power sector. We make reference to producing regions involved in the international trade of liquefied natural gas. Questions related to demand from the European Union, OECD Asia, and parts of non-OECD Asia are discussed. China and India-representing the centers of prolific anticipated demand growth-are discussed in terms of challenges to domestic supply growth and competing environmental and political objectives.

China’s dash for gas: local challenges and global consequences

“…In 2011, China's gas demand totalled 108.9 billion cubic metres (bcm) and the IEA's GAS scenario expected that it would reach 247 bcm by 2015; in fact, total demand that year was 194.7 bcm. At the time, there was concern that China's gas demand was stagnating and that a Golden Age of Gas seemed unlikely (Boersma and Jordaan 2017). Then, stimulated by Government targets, demand grew rapidly.…”

Challenges to the Future of Gas

“…25 For definitions of the IGU regions see Appendix 3. 26 For comments on the IEA's Golden Age of Gas hypothesis see: IEA WEO (2017, Box 1, p. 337); Stern (2017);and Boersma and Jordaan (2017). 27 Three of the five scenarios in the Annual Energy Outlook presentation (Slide 27) by the EIA Administrator Sieminski (2017) in January 2017 suggested that prices will be at or below $5/MMbtu until 2040.…”

Identifying and Explaining Public Preferences for Renewable Energy Sources in Qatar

“…In addition, the unknowledgeable group decision may reflect the perception amongst citizens that Qatar's natural gas resource is a major economic engine and source of government funding so it should be preferable over other resources. A number of recent studies have also highlighted the potential of natural gas to reduce anthropogenic carbon dioxide in the near term and to act as a transitional fuel to renewable fuels [63,64]. However, a long-term dependence on this form of energy may stymie the transition to green energy sources [65].…”