GAS OF AGES
The world is on the cusp of a golden age for natural gas. Here are some factors that could quicken – or inhibit – the rise of “the fossil fuel of the future”
“NATURAL GAS IS A FUEL OF THE FUTURE,” wrote Daniel Yergin in his 2011 opus The Quest: Energy, Security and the Remaking of the Modern World. At the time, the notion that natural gas would eventually overtake coal – and even oil – as the most widely consumed fossil fuel in the world was not new. But it was just beginning to take on a new level of certainty. That same year the International Energy Agency (IEA) raised the question in its annual World Energy Outlook, which it called, “Are We Entering A Golden Age of Gas?” It predicted that by 2035 global natural supplies would need to grow by 1.8 trillion cubic meters per day from their current level in order to meet demand – a figure that is three times the current production of Russia.
Today that forecast holds strong, despite the fact that many world leaders seem prepared to phase out fossil fuels with a heightened vigor following the COP21 meetings in Paris last December. In its most recent 2015 outlook, the IEA predicted that under current policies, natural gas consumption would increase by 60 per cent between now and 2040, compared to 30-per cent growth for oil. Under more stringent environmental policies that would keep global atmospheric concentrations of C02 under 450 parts per million (ppm), natural gas consumption is still expected to grow by 15 per cent, compared to a reduction of 20 per cent for oil.
“What you can take from the IEA report is that the outlook for gas is stronger than other fossil fuels,” says Jackie Forrest, the vice-president of energy research at ARC Financial. “So, gas is a growth market, even under the scenario where we try to stay within that 450 ppm threshold.” Predicting just how all of this will shape up is impossible, but under all scenarios natural gas appears set to emerge the winner among all of the fossil fuels. To what degree natural gas plays a role in our future depends on three distinct yet tightly intertwined factors.