American Gas - February 2014 - (Page 8)

issues The Age of Gas d ig e s t The u.S. plastics industry has rebounded to pre-recession levels thanks to affordable shale gas, according to the society of the Plastics industry. America produced $373 billion in plastics in 2012, near the previous record high in 2006, the society said. it also exported plastics goods worth $58.5 billion. The U.s. plastics market is expanding faster than domestic manufacturing overall and is one of the few plastics markets worldwide that's increasing production capacity, the society said. Global demand for oil and gas pipeline materials will grow 5.3 percent a year through 2017, according to Freedonia Group, a research firm. Drivers include rising energy needs and a spike in offshore drilling. Demand for pipe will near 52 million metric tons within three years, compared to 40 million metric tons in 2012, the firm forecasts. north America is the largest market and will grow at an annual rate of 4.6 percent. But Asia will grow at a 5.7 percent rate to become the top consumer by 2017. in FY 2013, the Department of the interior collected more than $14.2 billion in revenues generated by energy production on public lands and offshore waters-a 17 percent increase over the previous year. in the Continued on page 10 8 AmericAn GAs february 2014 Denser networks will enhance delivery and improve market share for gas, GE says n atural gas will capture a larger share of world energy demand over the next decade, according to analysis by GE. In a recent white paper, "The Age of Gas and the Power of Networks," GE avers that investment in gas infrastructure around the world will lead to better system resiliency and more stable prices. As a result, natural gas will claim more of the energy market compared to coal and oil. Currently, the global gas market is 70 percent of the size of the oil market. But gas production and consumption will increase 36 percent by 2025, GE predicts. At that point, gas will claim a 26 percent share of the energy market. And assuming the right supply and policies, gas could achieve 28 percent market share in the same time frame, GE says. That would make it equal to or slightly greater than coal and oil by 2025. What will drive these eventualities? Production, infrastructure, and policy. Combined, the U.S. and Canada are now the largest natural gas producer, accounting for 25 percent of production. With estimated reserves of 2,500 trillion cubic feet, the U.S. should have nearly 100 years of supply at predicted consumption rates. Although conventional sources will constitute 70 percent of supply growth, unconventional gas will make up 20 percent of global supply by 2025, up from 14 percent today. Most of that gas will be developed in the U.S. and Canada. Around the world, gas generally travels from source to user by one of three means: pipeline, ship, or ground transport. Currently, pipelines deliver 89 percent, ships 10 percent, and rail or trucks 1 percent. Linking these network modes through infrastructure investments, new technologies, and market arrangements will bring together buyers and sellers and compound the network's value. Over the next five years, development of the transportation network will account for 30 percent of the $400 billion gas industry's annual capital spending. Mega-pipeline and LNG projects will anchor a new generation of smaller, modular networks. Currently, nearly one-third of gas produced is transported from one country to another, either by pipeline or LNG ship. Going forward, LNG investment will exceed spending on pipelines. In fact, international LNG trade will expand 70 percent over the next decade. GE anticipates that the increasing density of gas networks will make delivery more flexible and resilient. That will support increased use of gas by large-scale power and industrial users. Currently, 41 percent of gas produced is used for power generation. The use of gas to produce electricity will grow by nearly 50 percent by 2025. But none of these predictions is a foregone conclusion, GE points out. They depend on policy adjustments that promote investment and coordination among companies and governments. In particular, GE says, policymakers should foster the horizontal growth of gas networks and vertical linkages among energy systems. In many parts of the world, that will involve direct investment by state-sponsored energy companies. In the United States, that might mean tax incentives that drive innovation and investment by the private sector. Appropriate tax policy on the consumer side is equally important, GE says. For example, current policies often tax LNG based on volume rather than energy content. That makes the effective tax on LNG 1.7 times that of diesel fuel. With the right policies, says GE, the industry could avoid such distortions and be better positioned to make investments for a more flexible, resilient energy system. -Eric Schoeniger issues Heat, Power, Savings DOE helps companies and communities switch to CHP t he U.S. Department of Energy has launched seven technical-assistance centers to promote industrial energy efficiency, including combined heat and power, or CHP.

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American Gas - February 2014