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Global gas demand in the transport sector

Hydrocarbon Engineering,

According to Wood Mackenzie, 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. This includes natural gas vehicles (NGVs) on roads, marine LNG in ships and possibly railroads.

Where does gas fit?
‘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 investments in gas refuelling infrastructure worthwhile and second, increased environmental restrictions on emissions are encouraging wider global uptake,’ said Noel Tomnay, Head of Global Gas Research at Wood Mackenzie.

He continued, ‘Global gas demand in the transport sector will grow from nearly 40 billion m3 in 2012 to over 160 billion m3 in 2030, increasing from 1.2% to some 3.4% of global gas demand according to our forecasts. But perhaps the most striking thing is the growth of LNG demand associated with the transport sector, increasing from less than 5 billion m3 in 2012 to over 80 billion m3 in 2030, increasing from less than 1 to some 10% of global LNG demand.’

The emphasis is on the Heavy Duty (HD) trucking fleet and are expected to be the greatest driver of NGV gas demand, supported by the best economics. Tomnay said, ‘this will mostly be long haul freight, with high consumption rates, high utilisation rates and often remote from refuelling infrastructure, such that LNG will be preferred over CNG, with its storage restrictions.’

What about oil and oil products?
The impact of gas demand in the transport sector is expected to be significant on oil. Globally, in 2012, gas in transport was equivalent to approximately 700 00 bpd of oil. This is expected to grow to 1.5 million bpd by 2020 and then double by 2030. Diesel demand, associated with the large road vehicle market of HD trucks and buses, and gasoil associated with shipping, is expected to be hit the hardest. 10% of the global bunker market for shipping will be met by LNG by 2030.

A global outlook
China is expected to remain the single largest market for gas in transport, with 45 billion m3 by 2030. Tomny said, ‘ demand in China is presently being propelled by a combination of winning factors. These include the most favourable economics, due to the lose 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.’

In the Chinese and North American transport sectors, small scale LNG supply facilities will remain a feature of the transport sector, reflecting geography, market access and LNG availability. Wood Mackenzie also 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.

Tomny 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.’

Adapted from press release by Claira Lloyd

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