By the OGJ Online Staff
HOUSTON, Mar. 29�Natural gas's share of the global electric power generation market will grow to 35.2% in 2005, up from 27.9% in 1999, US government forecasters predict.
With gas becoming the fuel of choice for new electric generation globally, the US Energy Information Administration has projected its share of the power market will rise to 41.7% in 2010, 51% in 2015, and 59.7% in 2020.
EIA forecasters attributed the rise of gas to a desire in Western Europe to move away from relying on coal and nuclear; uncertainty about national and international policies such as the Kyoto Protocol that could affect coal use, an expected decline in nuclear power capacity in the US, increasing substitution of gas for coal in Eastern Europe and the former Soviet Union, and fuel diversification to cut dependence on hydroelectricity among developing countries in South America.
The most rapid growth of gas by the power industry among industrialized nations is expected in Western Europe. In 1975, a European Union directive restricted gas use in new power plants and gas's share of the market declined to 5% in 1981, where it remained for most of the decade. Gas use began rising after reserves were discovered in the North Sea and imports from Russia and North Africa dampened concern about relying on gas.
In 1999 natural gas held a 14% share of the market in Western Europe. EIA predicted this will rise to 28% by 2020. However, forecasters said, to realize its potential increased access by pipeline or LNG tanker will be necessary.
In 2020, the EIA projected gas will account for 58% of the market in the former Soviet Union, up from 51% in 1990.
Rising price a spoiler?
In the US, gas use is expected to double to 28% in 2020 from 1999. Rising prices have raised questions about this optimistic forecast, the EIA conceded, but it said higher prices will boost spending on exploration and development, "reducing prices and restoring the competitiveness of gas as a generation fuel." Imports from Canada are also projected to help take up the slack.
In Central and South America, gas is expected to account for 32% of the electric power market in 2020, compared to 11% in 1999. Hydropower is the major source of electricity today, accounting for about 75% of the region's electricity fuel market in 1999.
But the EIA said environmental concern, cost overruns on previous hydro projects, and power shortfalls during droughts have prompted governments to view gas as a way of diversifying their power portfolios. Development of a continent wide gas pipeline system that will transport Argentine and Bolivian gas to Chile and Brazil is expected to contribute to the rise in gas use in power generation.
With some exceptions, gas is projected to grow at the expense of nuclear fuel, hydro, and coal. Worldwide oil's share of the electric power market is expected to remain stable at 10%.
Japan's reliance on nuclear power is expected to keep rising to 38% in 2020, up from 33% in 1999, the EIA said. Nuclear is also expected to play a growing role in developing Asia, especially China, India, Pakistan, South Korea, and Taiwan, EIA said. All have nuclear power programs. But the region's overall dependence on nuclear power is expected to remain stable at 8-9%.
