Natural Gas: U.S. Markets in a Global Context

2010 Energy ConferenceU.S. Energy Information Administration

Johns Hopkins University - SAISp y

April 7, 2010 - Washington, DC

Natural Gas: U.S. Markets is a Global Context, April 7, 2010Richard Newell, March 2, 2010 1Richard Newell, SAIS, December 14, 2009 1

April 7, 2010 Washington, DC

Discussion Outline

• Setting the context

• Demand/supply outlook for 3 regions– United StatesUnited States– OECD Europe– China

• Evolution of the global gas market – Expected trade flows– Pricing and contract issues– Key uncertainties

Natural Gas: U.S. Markets is a Global Context, April 7, 2010 2

Natural gas is expected to provide about 23% of the world’s energy needs

250 History Projections

world energy consumptionquadrillion Btu

200Liquids (including biofuels)

36%

32%

28%

100

150Natural gas

Coal27%

23%

Share of World

50

100Renewables(excluding biofuels)

23%

8%

11%

6%

Total

01980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030

Nuclear6%

Natural Gas: U.S. Markets is a Global Context, April 7, 2010 3

1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030

Source: EIA, International Energy Outlook 2009

The largest gas markets are not located in the same regions as most of the world’s gas reserves

N OECD E /E iOECD Europe

North America 2,170

Non-OECD Europe/Eurasia

161 548

Reserves Consumption

319752

North America ,754

Reserves ConsumptionMiddle East

p

Reserves Consumption

Central and South America

Asia and Oceania2,658 345

Reserves Consumption

267 165Reserves Consumption 495 117

Africa 539 593

Reserves Consumption

Natural Gas: U.S. Markets is a Global Context, April 7, 2010 4

Reserves ConsumptionUnits are trillion cubic feet

Locations of U.S. shale gas plays

U.S. shale gas plays

Natural Gas: U.S. Markets is a Global Context, April 7, 2010 5

United States gas consumption

25 ProjectionsHistory

U.S. natural gas consumptiontrillion cubic feet

20

25

Electric power

15Industrial

5

10

Commercial

Other*

0

5

1990 1995 2000 2005 2010 2015 2020 2025 2030 2035

Residential

Natural Gas: U.S. Markets is a Global Context, April 7, 2010 6

1990 1995 2000 2005 2010 2015 2020 2025 2030 2035

*- natural gas used for transport, pipelines, and lease and plant fuel

Source: EIA, Annual Energy Outlook 2010

United States natural gas imports

30

trillion cubic feetProjectionsHistory

25

30 jy

6%

20

Consumption

Net imports

6%

13%

Other*

15

Domestic supply

Residential10

1990 1995 2000 2005 2010 2015 2020 2025 2030 2035

Natural Gas: U.S. Markets is a Global Context, April 7, 2010 7

1990 1995 2000 2005 2010 2015 2020 2025 2030 2035

Source: EIA, Annual Energy Outlook 2010

OECD Europe natural gas consumption

25

OECD Europe natural gas consumptiontrillion cubic feet

20

25

Electric power

15

I d t i l

5

10

Commercial

Industrial

0

5

2005 2010 2015 2020 2025 2030

Residential

Natural Gas: U.S. Markets is a Global Context, April 7, 2010 8

2005 2010 2015 2020 2025 2030

Source: EIA, International Energy Outlook 2009

OECD Europe natural gas imports

25

trillion cubic feetProjectionsHistory

20

25 jy

C ti

15Net imports

45%

Consumption 57%

5

10Domestic supply

Residential

0

5

1990 1995 2000 2005 2010 2015 2020 2025 2030

Natural Gas: U.S. Markets is a Global Context, April 7, 2010 9

1990 1995 2000 2005 2010 2015 2020 2025 2030

Source: EIA, International Energy Outlook 2009

China natural gas consumption

8

China natural gas consumptiontrillion cubic feet

6

8

4 Electric Power

2Industrial

02005 2010 2015 2020 2025 2030

CommercialResidential

Natural Gas: U.S. Markets is a Global Context, April 7, 2010 10

2005 2010 2015 2020 2025 2030

Source: EIA, International Energy Outlook 2009

China natural gas imports

10

trillion cubic feetProjectionsHistory

8

10 jy

6Net imports

37%

2

4

0

2

1990 1995 2000 2005 2010 2015 2020 2025 2030

Consumption

Domestic supply

Natural Gas: U.S. Markets is a Global Context, April 7, 2010 11

1990 1995 2000 2005 2010 2015 2020 2025 2030Source: EIA International Energy Outlook 2009

Outlook for global LNG trade

LNG trade expectations as of 2005-2006:National Petroleum Council’s “Hard Truth’s” study

2000 2030

4.8 trillion cubic feet per yearper year

Natural Gas: U.S. Markets is a Global Context, April 7, 2010 12Source: National Petroleum Council, 2007

Increasing gas liquefaction capacityliquefaction capacitytrillion cubic feet

20

14

16

18

20

8

10

12

0

2

4

6

02006 2010 2015 2020 2025 2030 2035

OECD Europe United States Non-OECD Asia Africa

Russia MiddleEast NonOECDAmericas Australia/NewZealand

Natural Gas: U.S. Markets is a Global Context, April 7, 2010 13Source: EIA Estimates

Russia Middle East Non-OECD Americas Australia/New Zealand

Over the past 5 years, EIA has significantly lowered its projection of LNG imports into the U.S.

8History Projections

U.S. net LNG importstrillion cubic feet

6

8y

AEO2005

4

6

2

4

0

AEO2010

Natural Gas: U.S. Markets is a Global Context, April 7, 2010 14

2000 2005 2010 2015 2020 2025 2030 2035

Source: EIA, Annual Energy Outlooks

Oil prices could remain well above U.S. gas prices if shale gas production continues to grow

5 ProjectionsHistory

ratio of oil prices to natural gas priceson a thermal equivalent basis

4

5 ProjectionsHistory

3

1

2

01990 1995 2000 2005 2010 2015 2020 2025 2030 2035

Natural Gas: U.S. Markets is a Global Context, April 7, 2010 15Source: EIA, Annual Energy Outlook 2010