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435: Gas Surplus-Deficit All Countries and Regions

07-14-2012 Team

We have prepared this unique analysis of gas consumption/production surplus/deficit for all regions and countries in the world going back to 1970 and forecast from 2012 to 2018. Our insights into the energy business and markets allows us to make accurate forecasts for both gas production (supply) and gas consumption (usage) for each country. This can assist investors - because countries with an expanding surplus of gas are exports of gas - and this provides valuable revenues. They also protect the country from the ravages of Peak Oil - high oil prices. The analysis shows the big players in the global gas businesses. It should interest all investors.

USA: Some of the key insights is the gigantic reversal of fortunes for the USA that we predict will go from a deficit of 8 BCF per day to a surplus within a ten year period, mainly due the the Shale Gas plays in the Bakken and Marcellous formations of Texas/Louisiana, NE USA and North Dakota/Wyoming regions. Horizontal wells using multiple-fraccing technology has allows previously tight gas in shales to be produced economically that has drive gas prices down from $12/mmbtu to $2/mmbtu. The oil business has been fraccing wells for over 60 years - nothing new - but it was only really about 7 years ago that this was combined with horizontal wells in this shale formation to demonstrate good productivity and economic wells - drilled in multiple-batch mode.

Saudi Arabia: The gas consumption is skyrocketting as electricity demand skyrockets along with a population explosion in a desert nation. 45 deg C heat and little water mean this gas is used to cool everything down. We expect this to continue as the middle classes expand and government keep populations happy with cheap energy and subidies. Much of the gas will be imported. This will also offset oil usage - allowing oil exports to remain at high levels.

Europe: At face value, the European numbers looks like good news, but in reality - they suggest big problems. We believe most European countries will cut gas consumption as gas prices remain high and economies suffer from industrial decline and massive deficits and debts. A long period of European stagnation from high oil prices will lead to lower gas consumption as less economic activity and growth and an aging population take their toll. In addition, European gas will decline in most countries. Russia will feed gas into Western Europe but try and keep prices high. Norway is the exception with gigantic gas exports and little consumption. Also expect gas consumption to decline as governments continue to subsidize high cost renewable replacement - until ultimately their money runs completely out (debts get too high). 

















Gas Production Consumption Deficit/Surplus - Global

















Gas Production Consumption Deficit/Surplus - Western Europe

















Gas Production Consumption Deficit/Surplus South & Central America

Brazil is worth a mention. Despite spending $200 Billion/year on energy expansion offshore, the country is forecast to be a net gas importer until 2018.


US Shale Gas Boom Revolution Low Cost















Gas Production Consumption Deficit/Surplus - North America

USA has had a remarkable reversal of fortunes on the gas business. In 2007 horizontal drilling technically and muliple fraccing technologies were combined to prove economically beyond any doubt that gas could be extracted from Shales in the Bakken Formation and equivalents throughout the States. Approximately 12 BCF/day of production has been incrementally added and tens if not hundreds of thousands of jobs have been created that have turned economic backwaters like North Dakota into economic boom areas.  
















Gas Production Consumption Deficit/Surplus - Middle East

Qatar: The main uncertainty is how much gas Qatar produces and exports via LNG (tankers). Qatar's gas consumption also rises. But frankly, with a population of 200,000 native Qataris and 12 BCF of surplus (equivalent to 2 million barrels of oil) - these people will remain ultra-rich for years to come as long as the country remains stable in this sometimes turbulant region. The North Field (which extends into Iran as the South Pars Field) is so gigantic that no depletion can be detected - its thought to be about 1000 TCF - enough for 100s of years of production at high rates.

















Gas Production Consumption Deficit/Surplus - Eastern Europe - Russia and FSU Countries

Russia dominates the gas export scene in Europe - with ~16 BCF/day surplus, mainly exported to Western and Eastern European countries. This is equivalent to about 2 million barrels of oil a day. Turkey is a large importer with about 6 BCF/day (1 million barrels of oil equivalent).  

















Gas Production Consumption Deficit/Surplus - Asia Pacific

Of particular note is China massively increasing gas deficit prediction. This also assumes a slow-down in GDP growth to about 5% per annum (from the current 9.5%). Japan's deficit continues to expand as they shut down more nuclear power plants. The region has a net deficit of 30 BCF/day by 2018 (or about 5.5 million barrels of oil equivalent) - which is imported mainly via LNG tanker - albeit some piped gas will come from Russia and Kazakhstan.

















Gas Production Consumption Deficit/Surplus - Africa

Egypt's deficit increases as gas production collapses. Consumption is also forecast to decline as foreign investment remains weak. Algeria's exports decline - mainly because of increasing indigenous consumption as the population increases, albeit some production declines are expected in aging fields. Libya is expected to bounce back rapidly after the war in 2011. 
















Gas Deficit/Surplus - UK   

Gas production start a collapse shortly after Labour came to power in 1997 - after successful tax increases reduced investment in gas in the UK sector of the North Sea. The Uk switched from a net exporter to importer by early 2004.
















Gas Production Consumption Deficit/Surplus - UK  - collapse in gas production

Gas production in blue started a steep decline around 1999 a few years after Labour came to power. It then collapsed after tax rised by Gordon Brown. Then in March 2011 it collapsed at an accelerated pace after The Tory-Lib-Dem Coalition put another tax on oil and gas in the North Sea - it crashed 20% in the 12 months after the shock announcement. Calls for an exception of the new tax hike for gas fell in deaf ears - the tax went ahead - with predictable consquences. The UK new collects less tax revenue from the North Sea after less than 12 months and thousands of jobs have been lost - along with being a large constributor to the UK's manufacturing severe decline of the last 12 months. Shouting the goose that laid the golden egg springs to mind. No other countries has seen a gas production collapse like the UK anywhere in the world in the last ten years. No other country has seen so many successive tax increases on gas assets - rendering many fields sub-economic and curtailing drilling investment to a fraction of the 1990s levels. Some claim the UK is now the least stable oil tax regime in the world.

Gas consumption is market in brown - this drops as industrial decline and improvement in efficiency take hold. We forecast a prolonged period of stagnation and recession from mid 2012 onwards - hence the consumption profile reflects this. Without this rather miserable consumption decline, the deficit would be far worse (red) - because the production collapse is so severe.  

Compare this to the USA where gas production has risen sharply off the back of the Shale Gas boom.















Gas Production in North America - the USA is now the world's number one gas producer (eclipsing Russia at 58 BCF/day and Qatar in third place at 18 BCF/day). 64 BCF/day is massive and equivalent to 10.5 million barrrels of oil in energy equivalent thermal units (ignoring natural gas liquids which can also be added).


























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