¶ … Future Supply and Demand of Natural Gas
The technology developed in the United States has become available for application in other countries mainly through efforts of major service companies. Until the mid 1990s, Canada's gas production was predominantly from conventional gas formations. This conventional gas filled the available pipeline capacity and unconventional gas resources, which are more difficult to produce, were largely ignored. However, as pipeline capacity was expended and conventional gas production began approaching a peak, market conditions in Canada began to favor development of unconventional gas (Harry, pp88-96) In the recent past, the natural gas markets were fairly predictable; they are now undergoing profound and uncertain changes. Independently, each regional market had developed gradually deposits from the nearest pipeline networks and limiting exchanges between areas. The current trend is marked by greater competition between the available sources and greater flexibility in systems gas. (Tad, pp14-15)
It is apparent that technological innovations and improvements have played an important role in increasing unconventional natural gas development in North America. This technology, advanced over the past three to four decades, promises to become a worldwide commodity through efforts of many service companies. China, with its sizable unconventional natural gas potential, has every prospect of success to repeat the experience of the U.S. And Canada in adopting new technologies. The issue of energy security and vulnerability is currently of more concern to global economies than it has ever been before. As demand grows, energy resources become strategic commodities susceptible to being used for geopolitical leverage. The growing influence of geopolitical factors on the global energy market has profound implications for the interests, strategies, and policy-making of nations as well as for the ways that oil and natural gas companies conduct their business. (Wengenmayr and Thomas, pp42-43)
Background
The main producing countries in 2006 were the Russian Federation and the United States with 21.3% respectively and 18.5% of world production. Note that North America and the former Soviet Union produced 53.6% of total production in 2006. Other states also show a significant production. This is the case, for example, Canada (6.5%), Iran (3.7%), Norway (3%), Algeria (2.9%), UK (2.8%), Indonesia (2.6%), Saudi Arabia (2.6%) and Netherlands (2.2%) *. These ten countries accounted for two thirds of world production of natural gas in 2006. (Tad, pp14-15)
Total world production in 2006 was 2.865 trillion cubic meters, an increase of 3% over the previous year. An increased production of natural gas worldwide is expected due to exploration projects and expansion planned in anticipation of future demand upward.
The main consumer of natural gas in 2006 was the United States with 22% of total consumption and the Russian Federation, with 15.1%. North America and the former Soviet Union together consumed about 49% of natural gas. (Douglas and Marek, pp117-28)
The share of Europe (EU 25) in the total consumption of natural gas was 16.3%. These three areas accounted alone for nearly two-thirds of total consumption in 2006. The consumption growth was 2.5% between 2005 and 2006, with rates highest in Asia / Pacific (6.5%) and Africa (5.5%). The main energy agencies worldwide provide a significant increase in demand around the world over the next twenty years; growth should mainly take place in developing countries. (Tad, pp14-15)
Discussion
Since the 70s, natural gas is the primary energy in fashion, one whose rate annual growth is the highest sustainable worldwide (2.5% per year). Its main outlet is power generation with gas turbine combined cycle considered as one of the cheapest technology. (Kemp, pp4-9) Due to physical constraints pipelines global market did not exist but several regional markets coexisted with their own dynamics of supply, demand and prices: in North America, Europe and Asia. Indeed, the rigidity and cost of transporting gas resulted necessarily a fixed link between the field and the end user. Since transport is 7-10 times more expensive than oil, the sustainability of demand for gas would be and ensured financial and technical risks were taken. (Tad, pp14-15) The liquefaction was then allowed transport gas over long distances at low cost compared to gas pipelines, thereby allowing greater diversification of suppliers. Gradually, the natural gas markets were transformed with the revolution of the impression of a LNG creation of a world market and growth of spot markets. Little-used energy source until the oil shocks, natural gas was of interest lower compared to other fossil fuel: difficult to transport,...
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