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Jul-23-2019 12:37printcomments

Can Natural Gas Demand Sustain Its Current Pace?

Some experts have predicted a slowdown in use and production and sales of natural gas

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The US Energy Information Administration projects a 50 percent rise in global natural gas consumption between 2010 and 2035, with growth in Brazil and China driving increased demand.

(SALEM, Ore.) - Coal is no longer king and has not been for a long time. Natural gas surpassed coal as the primary generator of electricity in the U.S. back in 2003 and has not looked back since.

Globally, the demand for natural gas grew by 4.6 percent back in 2018. The biggest drivers for the growth included a healthy economy, varying weather conditions, and continued movement away from coal use around the world.

Potential Slowdown

Fatih Birol, Executive Director of the International Energy Agency, sees the use of natural gas heading for a slowdown. His agency’s annual natural gas report sees a potential economic downturn and less extreme weather conditions as two of the primary reasons for a possible reduction in growth for natural gas.

A reduced oil and natural gas rig fleet could also impact the production and sale of natural gas. Rig counts at the end of May were down to 1,061, a drop from a November 2018 high of 1,299 rigs. Lower supplies of natural gas can make it difficult for natural gas to continue matching or exceeding the growth levels of recent years.

Suppliers and Consumers

The IEA expects to see countries like Russia, Australia, and the U.S. to generate 90 percent of any future growth in natural gas use. China is expected to be one of the biggest consumers and accounts for 40 percent of the demand for natural gas.

They are looking for a quick turnaround in their air quality and benefit from the clean burning and efficiency of natural gas.

Still, China’s use of natural gas is expected to grow by only eight percent over the next five years. That is a significant change from growth rates of 14.5 percent and 18.1 percent in 2017 and 2018, respectively.

Other parts of the world that should continue contributing to the growth of natural gas include Africa, the U.S., and the Middle East. They will continue to benefit from an investment in making abundant supplies of cheap energy available for use by power plants and other industries. The U.S. is being looked at to meet continued demands thanks to increased production from shale fields.

Inventory Outlook

U.S. natural gas inventories were 15 percent lower at the end of March than they were during the same period the year before. However, the EIA projects that storage injections of natural gas will boost levels 17 percent higher by the end of October thanks to an increased pace over last year during the April through October injection season.

Ongoing Demand

Natural gas consumption reached its highest level since 2001 in March of 2019, with commercial deliveries at their highest since 1973. That led to electrical power deliveries also reaching peaks not seen since 2001.

While there may be some questions around whether natural gas can continue growing at its current pace, the current market does not yet reflect any real signs of a slowdown. It remains to be seen if the industry can continue the innovation necessary to keep the processing of LNG at the necessary capacity.

Predictions regarding the growth of natural gas consumption are difficult due to the variety of factors that play a part in the growth levels. As detailed earlier in this article, some experts have already predicted a slowdown in the use of natural gases and a slowdown when it comes to the production and sales of natural gas. There has been a lot of volatility in the natural gas market over the year and it seems that demand from Asia will power the growth of this industry from years to come according to expert predictions. This growth could be fueled for the next five years with strong gas consumption growth having been noted in a number of countries within Asia. It has also been noted that there have been a number of recent reforms within major markets, and these could have a profound impact on growth levels.

At present, the signs that experts have noted have been viewed as encouraging but many have been quick to point out that more data action may be needed in order to ensure market driven development of natural gas can be sustained within these markets. In addition, further investment LNG projects will prove essential in helping to drive growth. Source: Special Feature Dept.


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