By SARAH KENT
LONDON -- Natural gas is set to emerge as a significant new
transportation fuel over the next five years, raising the
prospect of a challenge to oil's dominance in the sector, the
International Energy Agency said Thursday.
Already, gas demand in road transport grew tenfold between
2000 and 2010, but cheap gas in the US as a result of the boom
in production of shale gas, and concerns over air pollution and
oil dependency in China, could help it develop into a more
mainstream fuel, the IEA said.
In its five-year gas outlook, the Paris-based energy
watchdog said it expects natural
gas use in road and maritime transportation to rise to 98
billion cubic meters by 2018, covering around 10% of
incremental energy needs in the transport sector. According to
the IEA, this shift will do more to reduce the medium-term
growth in oil demand than both biofuels and electric cars
"Gas is already a major fuel in power generation, but the
next five years will also see it emerging as a significant
transportation fuel, driven by abundant supplies as well as
concerns about oil dependency and air pollution," said Maria
van der Hoeven, the IEA's executive director.
Further down the line, the IEA said gas had significant
potential for use in heavy-duty transport such as freight and
rail, though such developments are unlikely over the next five
Despite this new demand factor, the IEA also highlighted
challenges facing gas in all major regions, including the
resilience of coal in North America, weak demand in Europe and
production difficulties in the Middle East and Africa.
Although the agency still sees the coming five years as a
"Golden Age" of gas, its latest medium-term forecast reduces
the five-year demand projection by 75 billion cubic
meters compared with its 2012 outlook.
Nonetheless, world natural
gas demand is expected to rise by 15.6% over the next five
years to reach 3.962 trillion cubic meters, an increase from
today's level that's equivalent to the current gas
production in the Middle East.
China is to remain the main driver of demand, accounting for
30% of global growth over the next five years. The country is
expected to become the world's fourth-largest gas producer, but
will still absorb a third of the expected increase in liquefied
natural gas supply and all of the increase in output from
Central Asia, the IEA said.
The US is expected to continue to dominate supply growth,
accounting for more than a fifth of the increase in global gas
production as it continues to exploit its reserves of shale
US production has surged over the past several years, thanks
to a technique known as hydraulic fracturing which has enabled
companies to extract natural gas trapped in shale rock
formations. The success enjoyed by the US has increased global
focus on unconventional gas, however the IEA said no major
development is expected to take place outside of North America
and possibly China before 2018.
Nonetheless, persistent interest in shale gas and other
unconventional gas resources could prepare the ground for
unconventional production to take off after 2020, the IEA
This story has been updated to correct the nature of the
rise in gas consumption in the third paragraph. The 98 billion
cubic meter consumption level for natural
gas given by the IEA included maritime transport as well as
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