Rystad Energy’s report anticipates a major shift in the global gas industry with increased unconventional production and the Middle East’s pivotal role.
In a report released by Rystad Energy, the global gas industry is poised for a significant transformation in the coming decade, with a projected surge in gas demand set to shape the future of energy production. The forecast suggests a substantial 12.5% increase in gas production between 2023 and 2030 as the world grapples with the evolving energy landscape.
Rystad Energy’s analysis acknowledges the global shift towards cleaner energy sources and the need to limit global warming to 1.9 and 2.5 degrees Celsius. This shift is accompanied by rapid growth in renewable energy alternatives. However, even in these scenarios, the existing set of conventional gas fields is expected to fall short of meeting the surging global demand, necessitating a rapid expansion in unconventional gas supply.
Gas-rich regions, particularly the Middle East with its abundant basins like Rub al Khali, are set to play a pivotal role in bridging this demand-supply gap. The Middle East is anticipated to provide an estimated 20 million tons per annum (tpa) of Liquified Natural Gas (LNG) by 2040, solidifying its position as a major contributor to the global gas market.
One of the defining trends in recent years has been the exponential growth of unconventional gas production, primarily shale gas. This growth can be attributed to technological advancements and reduced lead times in exploration and extraction processes. As a result, the global share of unconventional gas supply in total gas production has seen an unprecedented escalation. Starting at a mere 4% in 2000, it surged to 12% in 2022, and it is projected to reach an astonishing 35% in 2023.
As the report states, the influx of affordable gas from unconventional sources, coupled with the consistent supply from traditional exporting countries such as Russia, has led to a decline in exploration efforts for conventional gas. This phenomenon is evidenced by the fact that nearly 70% of the discovered conventional gas volumes have yet to receive sanctions for development. It underlines the considerable hurdles and reluctance associated with exploiting these conventional gas reserves.
Historically, Russia and the Middle East have been dominant players in conventional gas production, and this trend is showing no signs of slowing down. Middle Eastern countries, in particular, are scaling up their gas production volumes as part of their new energy transition strategies, aligning with global efforts to reduce carbon emissions and adopt cleaner energy alternatives.
“Gas is increasingly considered a crucial stepping stone to a sustainable future. With reduced emissions and regional energy security goals aligned, gas is poised to play a pivotal role in the global energy transition. The Middle East is a key driver of this shift, slowly moving into developing and increasing gas volumes as part of their new energy transition strategies.”Aatisha Mahajan, vice president of exploration, Rystad Energy
Rystad Energy’s report on the global gas industry outlines a transformative trajectory for unconventional gas. It anticipates that the share of unconventional gas in the global production mix will exceed 30% by 2030. This significant increase in unconventional gas production is attributed to a decline in exploration success over the past decade and a dearth of developed conventional gas projects, ultimately leading to a reduction in overall conventional gas supply.
The Gulf Cooperation Council (GCC) region, long regarded as a powerhouse in oil and gas production, is experiencing a notable shift. In recent years, there has been a decline in the discovery of large conventional reserves. Consequently, countries within the GCC are redirecting their efforts toward exploring and developing unconventional resources.
Saudi Arabia stands out as a prime example of this transition according to the report. The kingdom has set ambitious goals to reduce its reliance on oil in power production and achieve a balanced electricity generation mix of 50% renewables and 50% natural gas by 2030. This shift toward a more diversified energy landscape is fueled by the escalating domestic demand for gas, projected to reach 125 billion cubic meters (Bcm) annually by the end of the decade.
According to the report, to meet this burgeoning demand, Saudi Arabia is actively pursuing new sources of gas production. This includes tapping into non-associated gas fields and harnessing unconventional gas reservoirs, exemplified by the colossal Jafurah field. Jafurah, the most extensive liquids-rich shale gas play in the Middle East, commands estimated lifetime investments exceeding $100 billion. Saudi Aramco, a driving force behind the Jafurah project, is poised to achieve a peak shale gas production of 2 billion cubic feet per day (Bcfd) by 2030.
Rystad Energy’s projections suggest that this target of peak production will be realized in the latter half of the 2030s. By that time, the Jafurah project is expected to contribute nearly 15% of Saudi Arabia’s total gas production, significantly bolstering the nation’s overall gas supply.
In essence, Rystad Energy’s report underscores the global gas industry’s shift towards unconventional sources, with the Middle East and Saudi Arabia taking proactive steps to secure their positions in this evolving energy landscape.
As the industry strives to balance growing demand with environmental sustainability, the next decade promises to be a period of significant transformation, innovation, and adaptation in the world of energy production.
