Nearly two thirds (64%) of oil and gas sector leaders expect to increase or sustain spending on natural gas projects in 2018, as the sector prepares for gas to overtake oil as the world’s primary energy source in the mid-2030s.
Confidence in the case for gas is growing, according to a survey by DNV GL released during the World Gas Conference. The vast majority (86%) of the 813 senior industry professionals surveyed October-November 2017 agree that gas will play an increasingly important role in the global energy mix over the next decade, up from 77% last year.
The findings appear in “Transition in Motion,” DNV GL’s special report on the outlook for the oil and gas industry in 2018. The pace of the oil and gas industry’s intentions to lower carbon emissions differs by region, however. Just a third of survey respondents in North America (33%) say that their company is actively preparing for the shift to a lower carbon energy mix this year compared with more than half (51%) in the Middle East and North Africa.
Demand for gas will peak in the mid-2030s, well after the use of each of the other fossil fuels has gone into long-term decline, according to DNV GL. The company’s model predicts the industry’s gas investments will accelerate in the early-2020s as major oil companies decarbonize their business portfolios.
“Society’s transition to a less carbon-intensive energy mix is already a reality, and oil and gas will continue to be crucial components. Our research affirms that the industry is already taking positive steps to secure the important role we forecast gas to play in helping to meet future, lower-carbon energy requirements,” said Liv Hovem, chief executive officer, DNV GL-Oil & Gas.
DNV GL forecasts electric power generation to be the primary consumer of gas in most regions, though manufacturing could demand similar volumes in emerging markets. DNV GL’s 2017 Energy Transition Outlook suggested that North East Eurasia and the Middle East and North Africa will increase gas output towards 2040, overtaking North America as the world’s largest gas producer. Production is also forecast to double in China, the Indian subcontinent, and South East Asia.
Nearly 24% of survey respondents believe that onshore pipeline projects currently in development are adaptable enough to cope with potential long-term changes in the gas mix, such as a greater variety of calorific values, hydrogen, and biogas, while 13% disagree.
More than 276,000 km of onshore pipelines will be installed globally between 2017 and 2021, according to a Douglas-Westwood report cited in DNV GL’s report. Based on DNV GL’s industry outlook research, the Middle East and North Africa region expects the biggest increase in both onshore and offshore pipeline investment over the next 3 years, but major projects are in progress across the world. Many of these are gas pipelines, and this reflects the shifting emphasis towards gas. In 2013, for instance, 61% of all planned pipeline construction was for crude oil and products. Of the 23,588 km planned for 2018, over 80% are gas pipelines (OGJ, Feb. 5, 2018, p. 72).
DNV GL will publish the 2018 edition of its Energy Transition Outlook Aug. 30. “Transition in Motion” forms part of the Energy Transition Outlook and is based on the global survey. The companies surveyed vary in size: 44% had annual revenue of $500 million or less, while 21% had annual revenue in excess of $5 billion. Respondents were drawn from across the oil and gas value chain, including publicly listed companies and privately held firms. They also represented a range of functions within the industry, from board-level executives to senior engineers.
Contact Christopher E. Smith at [email protected].
