If you’re using natural gas in any form, you have reason to celebrate. The International Energy Agency has just declared that the U.S. will see natural gas beat oil as the most-used fuel by 2030.
Nearly half of the rise in global production of natural gas, by 2035, will be due to unconventional production—obtained from shale deposits like the Bakken—and U.S. production is expected to increase by 23 percent.
Alongside China and Australia, this will account for most of the global increase.
It isn’t wholly unexpected, of course—unconventional production has been on the rise, in no small part due to fracking. One result of this production boom has been a drop in natural gas prices to a historic 10-year low; it was under $2 per million cubic meters as of April on the New York Mercantile Exchange.
Indeed, domestic producers like Cheniere Energy Inc. (NYSE: LNG) are trying to make a healthy profit off this over-production by building export terminals for LNG to meet high demand in Asian markets.
The IEA report sees U.S. exports hitting 19 billion cubic meters by 2020, while in 2010 the U.S. was importing as much as 76 billion cubic meters.
Overall, North America is projected to export around 35 billion cubic meters by 2020. By 2035, domestic production could be as high as 800 billion cubic meters—up from current levels of 650 billion.
“The U.S. Department of Energy is waiting to review the results of a price impact study before dealing with the pending export applications,” the IEA said.
One assumption the report makes is that around 93 percent of all domestic gas will stay available for use in domestic applications, and that prices should be around $5.50 per million Btu by 2020.
As of Monday in New York, front-month gas was $3.52 per million Btu, Businessweek reports.
As demand continues to rise in Asia, those countries will begin to look for lower LNG prices. U.S. exporters were seeing margins of $6.10 per million Btu in 2011 to Japan, but that will drop to $4.30 or thereabouts by 2020.
Increasing demand in Asia and the U.S. means the world’s overall gas usage could rise by as much as 19 percent by 2017 (from the levels seen in 2010), while Europe’s overall consumption is projected to decrease by 1.6 percent.
It’s quite possible that Europe’s determined drive to increase the role of renewables in its power infrastructure is a factor here.
China, meanwhile, will see nearly four times the consumption levels of 2011 by 2035.
All things considered, we may see a rise in natural gas-powered vehicles and infrastructure, as it is more than likely that prices will remain low compared to conventional fuels for a good time to come.