US energy report shows nations seeking oil and gas through net-zero target date as LNG expands

Tuesday, 12 October 2021
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LNG News Editor: 

The US government’s long-term energy forecast through to 2050 has the nation showing rapid growth in net exports over the next 10 years, as it continues to expand its liquefied natural gas infrastructure and produce natural gas at high volumes, though there is an undertone of desperation for oil and gas worldwide and calls for more exploration and production.

“Oil and natural gas production will continue to grow, mainly to support increasing energy consumption in developing Asian economies,” said the 40-page International Energy Outlook published by the US Energy Information Administration (EIA).

Largest

The US report notes that the US, Russia and the Middle East region are currently the largest producers of natural gas.

In the global oil sector, the benchmark price has jumped in the high economic growth case in the report, while a consistent outcome is that Canada is one nation capable of expanding oil production to meet demand even amid the net-zero carbon-dioxide emission targets set for 2050 as well.

“All three will continue to expand production throughout the projection period, and the US will remain the largest producer worldwide, producing almost 43 trillion cubic feet (Tcf) in 2050 in the reference case,” said the EIA.

“In the Reference case, Russia, the US and the Middle East will all grow as net exporters throughout the projection period to provide natural gas to European and Asian markets,” it added.

“Because it is near Europe, China, and the rest of non‐OECD Asia, Russia’s net natural gas exports will grow through established pipeline infrastructure, potential future pipeline additions and LNG exports,” said the US report.

“The US also shows rapid growth in net exports over the next 10 years, as it continues to expand its LNG infrastructure and produce natural gas at high volumes,” added the report.

US LNG build-out

“LNG plants and transportation vessels facilitate the overseas transport of natural gas between regions that are not connected by pipeline, creating an outlet for natural gas produced in the US and the Middle East to reach overseas markets where it is in the highest demand,” stated the EIA.

The report noted that in addition to meeting domestic demand, growing production in the US, Russia and the Middle East serves increasing demand for natural gas in the global market.

“US and Russian natural gas production grows by about 10 Tcf between 2020 and 2050 in the Reference case. Middle East natural gas production grows by about 5 Tcf over the same period,” the report explained.

In the Reference case, global natural gas production steadily increases, growing by approximately 30 percent between 2020 and 2050.

Before that, natural gas production grew by 25 percent between 2010 and 2020, with the aid of new recovery techniques such as hydraulic fracturing and expanded infrastructure.

Projected growth in global natural gas demand and the expansion of processing and transportation infrastructure around the world drives growth in natural gas production to 2050.

Oil market

The EIA report said that output from both the Organization of Petroleum Exporting Countries (OPEC) and non‐OPEC nations would grow over the projection period, but OPEC production grows at almost three times the rate of non‐OPEC production between 2020 and 2050.

“We altered the assumptions about oil supply to achieve higher and lower oil prices, as seen in the 2050 input price of North Sea Brent crude oil,” said the EIA.

Brent was at $176 per barrel by 2050 in the high oil price case, at $95 per barrel in the reference case and $45 per barrel in the low oil price case.

“To meet increasing demand, countries will need to rely on increased exploration (to identify additional resources), increased drilling (to harvest new and proven reserves) and technology advances (to achieve greater production yields),” stated the EIA.

Supply of petroleum and other liquids continues increasing in both OPEC and non‐OPEC regions to meet growing world demand through 2050 across cases.

“Although consumption in the Reference case reaches approximately 125 million barrels per day by 2050, consumption is highest in the High Economic Growth case, where it reaches approximately 151 million barrels per day of total liquid fuels in 2050, exhibiting significant growth from current levels,” said the US report.

“Canada, Iran, Iraq and Russia all have large undeveloped crude oil resources and so could expand production to help meet 2050 global demand in the high economic growth case,” explained the report.

“Although Saudi Arabia and the US are also large resource holders, their resources have been more systematically developed and likely have less room to expand beyond their historical levels of production,” declared the EIA.

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