This paper will present the findings of the natural gas industry on the current status and trends in world natural gas supply and demand, highlighting the main constraints and challenges it faces to match the balance in terms of technology, investments, transport options and regulation.
For almost half a century, federal policy makers in the United States have used "oil security" as code for "energy security." The international nature of oil markets, the decades-old global oil cartel, the rise in oil imports, instability in the Middle East and the near-total dependence of the world's transportation systems on oil-based fuels, underscore the significant national security implications associated with US oil consumption.
It is increasingly clear however, that this narrow definition is inadequate for the U.S. to effectively address the growing energy security challenges of the 21st century. Global demand for all fossil fuels is rising dramatically, competition for capital to produce and deliver energy to markets is increasing, and global energy trade is rapidly expanding. These trends could alter geopolitical relationships and strategies in very significant ways, requiring a broader energy security policy focus than the oil-centric one of the last fifty years.
Natural gas is the most prominent new entrant in this broader energy security arena. Its elevated status is due to several factors. First, while global energy consumption is growing rapidly, demand for natural gas is growing faster still, outstripping the pace for all other energy sources; by 2025, the world will be consuming around 70% more gas than it does today. Much of the incremental demand growth, largely for power generation, will occur in the developing world. In the U.S. and Europe, where absolute demand is the largest, incremental gas demand growth will mirror that of the developing world, although it will not be as large on a percentage basis. In the US, natural gas represents 24% of total US energy consumption; it is critical to both the economic and environmental health of the nation.
Second, natural gas is a relatively abundant energy resource. The world has roughly 6000 trillion cubic feet (tcf) of proved natural gas reserves and currently consumes around 100 tcf of gas per year. While gas reserves are substantial and more widely distributed than oil, they are still concentrated in just a few key regions of the world. Moving these narrowly-distributed resources to increasingly-dispersed and growing demand centers will require expanded or new distribution networks and new technologies to reduce costs. Technically recoverable reserves are much larger and even more widely distributed than proved reserves but will also require new technologies - along with significant investment and a suite of policies to encourage their development and deployment - - to economically find, produce, process and transport them.
Third - and related to the previous point - over 30% percent of the world's gas reserves are "stranded" by virtue of the transportation limitations associated with natural gas. Stranded resources can only be "monetized" by
