[Premium] WGC Opening: Global Gas Demand will Grow as Market Changes
Global gas demand will rise, bringing "unimaginable" benefits to future generations and helping to eliminate energy poverty. The way it is traded will inevitably change, speakers said at the opening of the World Gas Conference (WGC) in Washington DC June 26. The conference's theme is "fuelling the future."
US Energy Secretary Rick Perry (pictured above) said that the last time the WGC took place in the US capital was 30 years ago, when then US president Ronald Reagan gave a presentation. Nobody then could have foreseen the change the US gas industry would undergo in the next 30 years, said Perry, reminding the audience that last year the US became a net exporter, not a major importer as was expected back then. The present US president Donald Trump has not yet made an appearance at the event.
The gas market has become "more global, more interconnected," Perry said; cold weather and Chinese demand last winter had affected the whole global gas chain. He also said that US LNG had depoliticised the EU gas market "although you would not know it from all the rhetoric."
Earlier in the day, China was forecast by the IEA as likely to become the world’s largest natural gas importer by 2019 - rising to 171bn m3 of imports by 2023 much of which will be supplied as LNG, including from the US. Significantly Beijing to date has not yet included any tariffs on US LNG exports to China, among the US products that it will target if Washington announces further tariffs on Chinese exports.
Also speaking at the WGC were the CEOs of two oil majors, ExxonMobil's Darren Woods and Chevron's Michael Wirth, whose companies were now, in the words of panel chairman Dan Yergin, evolving into global gas majors. Woods said that the last decade, when shale gale became a reality, had spread the economic and environmental gains of gas worldwide. ExxonMobil, which he said recognised the reality of climate change, was taking measures to cut methane leaks; and that carbon capture and storage was "one of its major focus areas."
Chevron's Wirth said that the world economy was growing and this was seen in economic data and in demand for "our commodity." But there was a risk on the demand side, he said: while recognising the need of the US government to protect its steel industry, the tariffs would act as a drag, as the US does not have the means to produce all the different specification of pipelines it needs.
Woods agreed: he said the tax reforms had enhanced the industry, but what benefits free trade was low tariffs. He said the US, Canada and Mexico all gained from the North American Free Trade Agreement (Nafta) as the US imported raw materials from its neighbours and re-exported them as high-value products.
Both also agreed that the greater seasonality for gas, as well as its greater substitutability for other fuels, distinguished it from oil, with which it was often compared. However, there were many occasions when guaranteed gas deliveries were necessary - with Woods noting that power generators cannot rely on the spot market. Although with each incremental unit of capacity, the market grew and became more liquid, this will not necessarily help those for whom security of supply is critical and so "need to know where the next ton of LNG is coming from," he added.
(Banner photo: Rick Perry at the WGC, courtesy of his Twitter site)