(EnergyAsia, April 22 2013, Monday) — The world will need 180 trillion cubic feet (tcf) of natural gas feed and “significant” liquefaction capacity over the next decade to meet a projected doubling in global liquefied natural gas (LNG) demand by 2025, said consultant Wood Mackenzie.
Presenting at the LNG 17 conference in Houston, US last week, Frank Harris, the company’s head of global LNG consulting, said companies will be challenged to access and develop these gas resources.
He said production must increase to satisfy the world’s incremental LNG demand growth of 4.5% per year to 2025 as well as replace supplies “lost” to existing LNG projects.
“These are projects where production is going into decline, either due to depleting reserves or diversion of reserves to meet demand from local gas markets,” he said.
“Several major gas resource holding countries, such as Egypt and Indonesia, now have such strong domestic demand for gas that reserves can no longer be made available to fully support export – from new, and in some cases existing facilities.
“This creates the requirement to look for new sources of supply.”
For now, natural gas supply is plentiful, due to successful exploration and discovery of conventional gas and largely to the huge growth in unconventional reserves, said Mr Harris.
In North America, the shale gas revolution has created the potential for significant LNG exports, although proponents face challenges. While explorers have found large reserves from Australia to East Africa to the Levant, turning them into LNG remains a challenge.
LNG developers have the options of exploiting existing conventional resources, finding additional conventional resources, or developing unconventional resources, said Wood Mackenzie. However, each of these options has its challenges, typically a mixture of technical, political and/or economic factors.
“From the LNG industry’s perspective this means that the main challenge is how to combine exploitation of discovered conventional resources, with exploration for more conventional gas and the development of unconventional resources,” said Mr Harris.
While unconventional gas to LNG remains a key industry theme, Wood Mackenzie sees limits to its ultimate role, driven by a combination of competing, domestic requirements for gas, economics and environmental concerns.
“Unconventional gas for LNG is an increasingly exciting development opportunity for the industry, although local issues may restrict its ultimate contribution,” said Noel Tomnay, the company’s head of global gas research.
“We expect gas focused exploration to continue as a major theme, particularly in light of burgeoning exploration budgets, but there will be the need for greater or increased focus, otherwise players risk just adding to the bank of already stranded gas.”