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Gas demand rises to 2030 in all scenarios: Shell

12 Apr 2018 16:58 (+01:00 GMT)
Gas demand rises to 2030 in all scenarios: Shell

London, 12 April (Argus) — Global gas demand will expand in the years to 2030 even under the most aggressive carbon-reduction scenario, Shell says.

The firm's third scenario for the energy transition towards a low-carbon future, labelled "Sky", has compound annual growth of 2.1pc in 2020-25 and 0.9pc in 2025-30. But demand falls from 2030-50.

Sky is Shell's most aggressive carbon-reduction scenario, with global net zero CO2 emissions achieved by 2070 rather than 2100 under its previous "Mountains" and "Oceans" scenarios.

Only the Sky scenario would be sufficient to meet the Paris climate goal of keeping the global temperature rise under 2°C, Shell said.

But it requires "sustained collaboration across all sectors of society, supported by highly effective government policy", in contrast to Oceans, which is driven by private-sector initiatives and Mountains, which is based on government-led changes.

Gas demand growth supports Shell's production and sales

Growth in global gas demand means a low risk of stranded assets in Shell's portfolio, it said.

Much of the growth is driven by gas replacing coal in the power generation and industrial sectors, it said. Global LNG demand rose to 293mn t in 2017 from 264mn t a year earlier.

As a consequence of further growth in demand, Shell expects to produce 80pc of its proved oil and gas reserves before 2030, it said.

Global investment in new oil and gas production will remain essential to avoid a supply shortage in the middle of the 2020s, Shell said.

The firm is increasingly sourcing its gas and LNG from third parties, it said.

Around 60pc of Shell's integrated gas portfolio is priced with a link to oil markets, and based on the firm's view of future oil prices LNG would be in a range of $6-12mn Btu for Asian markets in the period to 2030. Shell sells 60pc of its LNG to these markets.

Small-scale ambitions

Shell sees substantial growth potential for LNG use in transport.

This demand was 14mn t/yr last year but if the entire marine and heavy-duty freight sector were to convert to LNG it would require 1,200mn t/yr.

Shell has a network of six LNG road refuelling stations in the Netherlands. One of these, located on the premises of Dutch supermarket chain Albert Heijn, is used by 150 LNG-fuelled delivery trucks a day.

Shell has agreements for LNG supply for marine transportation with a 2016 agreement with the world's largest cruise operator, Carnival.

Shell's Norwegian subsidiary Gasnor has supply commitments of 300,000 t/yr in Norway and operates three liquefaction plants, two tankers and 20 LNG trucks, and supplies 30 terminals.

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Compound annual growth in gas demand%
YearsWorld IndiaUS
2020-252.15.41.0
2025-300.9-1.4-0.8
2030-40-0.5-3.3-1.2
2040-50-3.3-0.3-3.7