A glut in global supplies of natural gas over the next decade threatens to blunt investment in alternative energy sources, warns the IEA.
Speaking at the launch of the International Energy Agency’s annual World Energy Outlook report, Fatih Birol, its chief economist, said that the world was entering a “golden age of gas” because of surging production of shale gas using new technology developed in the United States.
He said that the IEA, the Paris-based agency that advises the Organisation for Economic Co-operation and Development on oil and energy issues, was now predicting a global surplus of the fuel of about 150 billion cubic metres annually in the years ahead.
That is equivalent to 5 per cent of world demand of 2940 billion cubic metres.
However, Dr Birol warned that depressed prices for the fuel were boosting investment in gas-fired power stations and having a knock-on impact on rival technologies considered critical for meeting international carbon-reduction targets, which are now less competitive.
“Modest gas prices will in turn have a negative impact on many alternative fuels, including renewables and nuclear energy,” he said. “We can already see the first evidence of this in the United States.”
He pointed out that several wind energy projects had been cancelled or postponed in the US in recent months. “Nuclear is the same. The advantage of gas is that you have a very low capital cost compared with nuclear.”
Rapid growth in shale gas production has been responsible for a twentyfold increase in unconventional gas output in the US over the past decade. The same technology is now being applied across Europe, China and India, with big ramifications for the international gas industry.
Dr Birol said that global gas production was set to grow by 44 per cent between 2008 and 2035, with Chinese demand growth accounting for one fifth of the total increase.
In contrast, Dr Birol said that the world’s production of conventional crude oil may have already peaked as long ago as 2006.
He said that oil production from the world’s existing fields had hit a high of 70 million barrels per day in 2006 but now stood at about 69 million barrels.
