Natural Gas: Star Product of the Twenty-First Century?
Primary energy production is largely based on oil and coal. Next comes natural gas, which represents almost a quarter of primary energy production worldwide. The average growth of natural gas production in the last decade has been 2.5 times higher than oil, around 2.5% per year on average, but slower than coal (4.2% per year). However, if we exclude China, the growth of coal production has averaged 2% per year. Natural gas is therefore one of the most if not the most dynamic source of energy today.
The Various Usages of Natural Gas
The strength of natural gas lies in the variety of its applications. It can be an alternative to both oil and coal in electricity production. It can also replace oil or coal for heating systems, its main use in OECD countries. Finally, it can substitute oil or coal in a variety of industrial applications: as fuel for a heating process or as feedstock for specific applications. It can even serve as an oil substitute for transportation, even though such usage is today very limited (Fig. 3.24).
Natural gas is therefore an alternative energy by nature. If it does not dominate any application, it is used in most sectors with every time a range of specific advantages. This is the diversity of these usages which explain the dynamism of its development.
North America is the biggest consumer of natural gas in the world, with 28% of global consumption. The particularity of North America is that it ensures its own production of natural gas. There are indeed almost no exchanges between North America and other regions of the world. This can be simply explained by the fact that the cost of transporting natural gas is extremely expensive. Asia comes second with around 20% of consumption worldwide, and Europe third with 17%. Eurasia with around 190 million inhabitants comes fourth with 15%, which makes the region the biggest natural gas consumer per individual; natural gas consumption in Russia is 3 toe/year/individual a year. In comparison, North America, Europe and the Middle East come in at around 1-1.5 toe/year/individ- ual (Fig. 3.25).
The consumption of natural gas has strongly evolved over the last 10 years. It decreased in Europe by 0.5% per year on average, and increased in the Middle East, Africa, South America and Asia at a growth rate of about 5% per year (versus 3.5% per year for oil). In North America, it progressed by 1.7% per year on average. There, natural gas was the only source of energy not to decline in terms of consumption; consumption declined by 0.8% per year on average for oil and more than 2% per year for coal. In North America, natural gas gained market share from other energy sources.
Fig. 3.24 Consumption of energy per sector (© OECD/IEA, WEO 2012)
Fig.3 .25 Worldwide natural gas consumption (BP 2014)
Fig. 3.26 Evolution of natural gas consumption per region (BP 2014)
The most striking element of the global natural gas market is the growth in consumption of the resource in China. Although the country is a comparatively small consumer, consumption there has increased by an average of 17% per year in the last few decades. At the same time, consumption of oil grew by 6% and that of coal by 8% on average. The share of natural gas thus increased within the Chinese energy mix. Despite this growth, the increase in gas consumption in China still represents less than 10% of the total increase in energy consumption in the country. Natural gas is a credible alternative to coal for electricity production and a very interesting option for space and home heating, provided the necessary distribution infrastructure is in place. It is easy to guess why China is moving this path. Russia’s huge reserves of natural gas are indeed geographically very close to China. Furthermore, according to the Energy Information Agency (2014) estimates, China would have the world’s highest reserves in unconventional shale gas. The International Energy Agency (2012) estimates that, by 2035, the share of unconventional gas could represent 75% of gas consumption (about 225 Mtoe) in China. This would correspond to a production output twice as large as today’s. Still, natural gas production would remain much smaller than that for coal, which today tops 1800 Mtoe (Fig. 3.26).