US 'will become one of the world's top gas exporters by 2020.'

IEA says growth in production as fracking opens up shale oil and gas deposits will mean US rivals Russia and Norway

<!–[if IE 9]><![endif]–>Natural gas is flared off as oil is pumped in the Bakken shale formation, North Dakota, US




The US is forecast to generate almost 40% of the rise in global gas output between 2016 and 2022.
Photograph: Rex Shutterstock

US ‘will become one of the world’s top gas exporters by 2020’

IEA says growth in production as fracking opens up shale oil and gas deposits will mean US rivals Russia and Norway

The American shale gas revolution will enjoy a second wind as rapid growth in domestic production sees the US join the world’s club of top gas exporters, a leading energy authority has predicted.

Fracking has already opened up US shale oil and gas deposits, leading to a fall in gas prices and a drop in greenhouse gas emissions as power generation switches from coal to gas, as well as reducing America’s historical reliance on fossil fuel imports.

But an increase in US gas production over the next five years will cause another revolution as the country begins liquefying and shipping gas to Asia, Europe and the Middle East, the International Energy Agency said.

In a report published on Thursday, the IEA forecast the US would generate almost 40% of the rise in global gas output between 2016 and 2022.

Come 2022, the US will produce more than a fifth of the world’s gas, putting it on the same level as top gas exporters such as Russia and Norway, the agency predicted. As an exporter of liquefied natural gas (LNG), it would become second biggest in five years, behind Australia but above Gulf state Qatar.

“The US is already the largest gas producer in the world and will increase production more than any other country over the next five years,” said Keisuke Sadamori, director for energy markets and security at the IEA. “US gas production will grow by nearly 3% a year.”

More than half of that new production will be turned into liquefied natural gas for exports, he added.

Three major LNG terminals are being built on the Texas coast by Houston-based firms, at a cost of tens of billions of dollars, to export the gas.

Last weekend, the first shipment of LNG imported from the US arrived in the UK, to provide about half of the country’s gas needs this summer. That came just weeks after the first US LNG shipment to central Europe, in a delivery to Poland, which is trying to reduce its reliance on Russian gas.

However, the big demand growth is predicted to come from Asia. China is anticipated to account for 40% of global demand growth, driven by government policies to tackle the dangerous levels of air pollution in many cities, which is largely caused by coal power stations.

“Especially in China, and more and more other Asian countries, gas is being used in order to reduce the coal and address the local pollution issue,” said Fatih Birol, executive director at the IEA.

India would lead growth in the rest of Asia, the report forecast. While Japan is already a big importer of LNG, the IEA said that Seoul’s decision to switch away from coal and nuclear power could see South Korea increase its appetite for LNG too.

The sources of demand in those countries will also change, with industry taking over from the power sector as the “main engine of demand growth”. The IEA cited the examples of the growing use of gas in the chemicals sector and in fertilisers in India.

By 2022, the agency said the three giant LNG exporters would be the US, Australia and Qatar, which is undergoing a blockade that the IEA said served as “a reminder that security of gas supply cannot be taken for granted”.

Last month, a giant floating LNG vessel set off from a South Korean shipyard to work on Shell’s Prelude gas field off Western Australia, where production is expected to begin in 2018.

The report did not assess the impact of Qatar’s recent announcement that it would increase LNG production by 30% within the next seven years. The UK relies on Qatar for nearly a third of its gas imports.

Overall, Sadamori said the key factor in the gas market in coming years would be production growth in the US and its emerging role as an exporter.

“The ability of the gas fields in the US to provide large quantities at competitive prices will be the most important feature [of the gas market], not only to keep gas competitive for US power generation and industry customers, but also to further increase pipelines exports to Mexico, Canada and deliver LNG to the global market.”