• Sunday, May 19, 2024
businessday logo

BusinessDay

New global gas production needed to meet demand, says Rystad

Gaslink as pioneer

Global gas demand is projected to rise in the next decade, thus influencing a 12.5 percent surge in production between 2023 and 2030. However, Rystad Energy forecasts that even in scenarios of 1.9 and 2.5 degrees Celsius warming, with rapid growth in renewable energy sources, the current set of existing gas fields will not meet global demand, requiring rapid growth in unconventional gas supply.

According to Rystad, gas-rich geographies such as the Middle East, with basins such as Rub al Khali, will play an essential role in bridging that gap, providing an estimated 20 million tons per annum (tpa) of Liquefied Natural Gas (LNG) by 2040.

The production of unconventional gas, such as shale, has experienced rapid growth in recent years due to technological advancements and reduced lead times.

This rapid growth has driven the global share of unconventional gas supply in global gas production at a pace that has previously required significantly more time to achieve, escalating from 4 percent in 2000 to 12 percent in 2022 and 35 percent in 2023.

Read also: Oil climbs near $84 a barrel on tightening global gas market

Aatisha Mahajan, vice president of exploration at Rystad Energy, said that gas is increasingly considered a crucial stepping stone to a sustainable future.

“With reduced emissions and regional energy security goals aligned, gas is poised to play a pivotal role in the global energy transition.

“The Middle East is a key driver of this shift, slowly moving into developing and increasing gas volumes as part of their new energy transition strategies,” she said.

The influx of affordable gas from unconventional sources and ongoing supply from exporting countries like Russia has tempered exploration efforts for conventional gas. This is evident in that nearly 70% of discovered conventional volumes have yet to receive sanctions for development, showcasing the hurdles and reluctance to develop some of these finds.

Read also: Longer walk to economic recovery as global gas prices surge

Historically, Russia and the Middle East have dominated conventional gas production. This is not slowing down anytime soon, with Middle Eastern countries ramping up gas volumes as part of their new energy transition strategies.

Call for capital

Global gas demand will rise toward the middle of the 2030s. However, currently producing and underdeveloped gas fields are expected to peak production in the next couple of years before starting to decline.

“Even considering all the fields yet to be sanctioned and currently in the discovery lifecycle category, peak production is still far from realisation under ideal scenarios

“Our analysis of global warming scenarios suggests more gas exploration and production is required to meet 1.9 or 2.5 degrees of warming.

“In every scenario except the 1.6 degrees, additional gas resources are needed to meet demand. Therefore, gas exploration and additional capital investment within prominent gas basins or gas-rich countries are necessary,” Rystad said.

Read also: Global gas glut leaves Nigeria’s LNG unsold, threatens N80bn dividend

According to the energy think-tank, unconventional gas will continue to play a prominent role in the world’s supply mix, estimated to increase to approximately a third by 2030.

“This expected increase in unconventional production is primarily due to a decline in exploration success over the past decade and the lack of developed conventional gas projects, leading to a drop in the overall conventional gas supply.

“Only 32 percent of conventional gas volumes discovered since 2010 are producing, with more than 50 percent yet to be approved for development.

“As a result, countries that rely on conventional sources of gas will have to turn towards unconventional volumes to meet net-zero targets and satisfy global demand if they do not increase their investment in production,” Rystad said