Wood Mackenzie: Global gas demand in transport sector to surpass 160 bcm by 2030

Growing oil and gas price differentials, combined with increased environmental restrictions on emissions, are making gas an increasingly compelling proposition in the global transport sector said Wood Mackenzie. This includes Natural Gas Vehicles (NGVs) on roads, marine liquefied natural gas (LNG) in ships and possibly railroads.

?Gas has traditionally played a niche role in global transport but it is now garnering greater attention due to two principal drivers. First, oil and gas price differentials are now making investment in gas re-fuelling infrastructure worthwhile and second, increased environmental restrictions on emissions are encouraging wider global uptake,? said Noel Tomnay, Head of Global Gas Research for Wood Mackenzie in a statement released on Wednesday.

Tomnay projected that global gas demand in the transport sector will grow from nearly 40 billion cubic meters (bcm) in 2012 to over 160 bcm in 2030, increasing from 1.2 percent to some 3.4 percent of global gas demand.

?But perhaps the most striking thing is the growth of LNG demand associated with the transport sector, increasing from less than 5 bcm in 2012 to over 80 bcm in 2030, increasing from less than 1 percent to some 10 percent of global LNG demand,? he said.

Wood Mackenzie emphasized that the Heavy Duty (HD) trucking fleet will be the greatest driver of NGV gas demand ? nearly 45 bcm by 2030 ? supported by the best economics. Tomnay explained: ?This will mostly be long haul freight, with high consumption rates, high utilisation rates and often remote from re-fuelling infrastructure, such that LNG will be preferred over CNG, with its storage restrictions.?

The impact of gas demand in transport on the oil sector will be significant. In 2012, gas in transport was equivalent to about 700 thousand barrels per day (kb/d) of oil globally. Wood Mackenzie forecasts that this will grow to 1.5 million barrels per day (mb/d) in 2020 and then double to 3.0 mb/d by 2030.

Diesel demand, associated with the large road vehicle market of HD trucks and buses, and gasoil, associated with shipping, will be hit the hardest. Wood Mackenzie forecasts that 10 percent of the global bunker market for shipping will be met by LNG by 2030.

China will remain the single largest market for gas in transport, with 45 bcm by 2030. ?Demand in China is presently being propelled by a combination of winning factors. These include the most favourable economics, due to the low cost of vehicles; strong vehicle market growth encouraging fleet investments in gas; and financial support from regional governments, keen to reduce emissions in cities where particulate pollution and smog is a growing problem. Demand growth in US and Europe is presently more slow, a result of the lack of infrastructure and consumer inertia. However, as natural gas fuel station corridors get built, and as innovators and early adopters seed the market, we anticipate stronger demand growth post-2020,? Tomnay explained.

Small-scale LNG supply facilities will remain a feature of the transport sector in China and North America, reflecting geography, market access and LNG availability. Accordingly Wood Mackenzie believes that Europe?s transport sector will be the largest market for conventional large scale LNG, delivered through import terminals in Northwest and Southern Europe for break-bulk distribution.

Tomnay concluded: ?NGV demand could begin to accelerate rapidly, as the market matures, the incremental costs come down, the technology becomes more mainstream in the culture and oil-gas spread persist in the long run.?

Editing by Reiner Simanjuntak