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Energy Investing: Natural Gas Supply and Demand

Energy investors should know that long-term trends in the natural gas industry are primarily dependent on demand projections. Barring the short-term fluctuations, these projections tell you what to expect decades down the road. One of the best places to look for these growth trends are from regular reports of the U.S. Energy Information Administration (EIA) and International Energy Agency (IEA).

The EIA’s Annual Energy Outlook provides long-term supply and demand projections for the United States. According to the early release of its 2013 report, U.S. natural gas consumption is expected to increase 17 percent from current levels to 28.7 Tcf in 2035. The IEA’s World Energy Outlook shows that, globally, natural gas demand will rise even more — some 47 percent, from 120 Tcf to 176 Tcf — in the same time.

Despite projecting long-term supply and demand trends, these organizations don’t always get it right. In 2007, the EIA held an overly bullish outlook for coal consumption. At the time, natural gas prices were rising, averaging $7.51 per Mcf, and the now-famous shale plays hadn’t yet made it into the spotlight.

In that report, imports of U.S. natural gas imports rose significantly to 2030, while coal demand grew steadily. Now it’s six years later, and the EIA has changed its outlook. In fact, the 2013 projections show that natural gas will be the only one of the fossil fuels to increase its share of the overall U.S. energy mix.

The following resources can be quite helpful for finding global growth trends for natural gas. Look for their annual reports:

This table shows the top natural gas–consuming countries, using the most recent data available

Top Natural Gas Consumers
Country Annual Consumption (Billion Cubic Meters)
United States 690.1 Bcm
Russia 424.6 Bcm
Iran 153.3 Bcm
China 130.7 Bcm
Japan 105.5 Bcm
Canada 104.8 Bcm
Saudi Arabia 99.2 Bcm
United Kingdom 80.2 Bcm
Germany 72.5 Bcm
Italy 71.3 Bcm

And this table shows the top-producing natural gas countries.

Top Natural Gas Producers
Country Annual Production (Billion Cubic Meters)
United States 651 Bcm
Russia 607 Bcm
Canada 160 Bcm
Iran 152 Bcm
Qatar 147 Bcm
China 103 Bcm
Norway 101 Bcm
Saudi Arabia 99 Bcm
Algeria 78 Bcm
Indonesia 76 Bcm
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