US could become the world’s largest exporter of gas by 2022 – IEA

The US will account for 40% of the world’s new gas production brought online to the year 2022 due to the continuing ‘remarkable’ growth of its domestic shale gas industry, according to the latest five-year forecast from the International Energy Agency (IEA).

The IEA estimates that, by 2022, US production will be over a fifth of global gas output, at 890bn cubic metres (bcm). The US is currently both the world’s largest producer and consumer of gas.

The forecasted increase in production is due to US shale gas producers increasing efficiency and producing more gas with fewer rigs, even at low price levels. The IEA says that, for example, production from the US’ Marcellus field, one of the world’s largest, will increase by 45% between 2016 and 2022.

Despite US domestic demand growing due to higher levels of industrial consumption, more than half of the country's production increase will be turned into liquefied natural gas (LNG) for export. By 2022 the US could challenge Australia and Qatar to become the leader of LNG exporters, says the IEA.

‘The US shale revolution shows no sign of running out of steam and its effects are now amplified by a second revolution of rising LNG supplies,’ said Dr Fatih Birol, the IEA’s Executive Director. ‘Also, the rising number of LNG consuming countries, from 15 in 2005 to 39 this year, shows that LNG attracts many new customers, especially in the emerging world.’

LNG prices have dropped as more liquefaction capacity comes online in an already well-supplied market. The IEA says that the introduction of more US LNG will challenge traditional business models and suppliers in the international gas market. Consumers could benefit from new competition with pipeline supplies, says the IEA.

The IEA report, Gas 2017, also notes that industry is surpassing the power sector as the largest source of gas demand growth.

Global gas demand is expected to grow by 1.6% a year for the next five years according to the analysis, with consumption reaching around 4,000 bcm by 2022, up from 3,630 bcm in 2016. China will account for 40% of this growth. 

The federal US Energy Information Administration says that US LNG exports will quadruple this year compared to 2016. A report from the agency says that exports are expected to average 1.9bn cubic feet (bcf) per day in 2017, compared to 0.5 bcf per day in 2016. It says that this will rise to 2.8 bcf per day in 2018 as new LNG facilities come online.

The IEA also recently released its 2017 World Energy Investment report, launched at the Energy Institute, which found that global energy investment fell by 12% in 2016, to $1.7tn, or 2.2% of global GDP. This marks the second consecutive year of decline, which the IEA says is due to a continued drop in upstream oil and gas spending. This was not offset by an increase in spending on energy efficiency and electricity networks. The share of clean energy spending reached 43% of total supply investment – a record high.