Forecasting World Natural Gas Supply
Authors: Al-Fattah S.M. , Startzman R.A. 
Published: June 2014

Summary
World gas supply forecasting has proved difficult because its exploration, transportation, and customer bases depend so heavily on fluctuating economic factors. Our recent study showed that the conventional Hubbert model with one complete production cycle is not appropriate to use to forecast gas-production trends for most gas-producing countries.
This paper presents our forecast for the world's supply of conventional natural gas to Year 2050. We developed a "multicyclic Hubbert" approach that accurately models the gas-production history of each gas-producing country. Models for all countries were then used to forecast future production of natural gas worldwide. We present the multicyclic modeling approach in a convenient form that makes production data that exhibit two or more cycles easier to model and aggregated these models to regional and world levels. We also developed and analyzed supply models for some organizations [e.g., the Organization of Petroleum Exporting Countries (OPEC), the Organization for Economic Cooperation and Development (OECD), the European Union (EU), and the Intl. Energy Agency (IEA)].
Our results indicate that the world supply of natural gas will peak with a plateau production of 99 Tcf/yr from 2014 to 2017, followed by an annual depletion rate of 1%/yr. Regional analyses indicate that gas production of some regions will peak soon and that North American gas production is now (1999) at its peak. West European gas production is predicted to peak in 2002. Former Soviet Union (FSU) and Middle East countries, which contain approximately 60% of the world's ultimate recoverable natural gas, will be the main sources of supply in the future.

Introduction
Natural gas is becoming an increasingly important source of the world's energy. In recent years, natural gas use has grown the fastest of all the fossil fuels, and it will continue to grow rapidly for several decades. The U.S. Energy Information Admin. (EIA)1 reported that world gas consumption grows by 3.3%/yr compared with 2.2%/yr for oil and 2.1%/yr for coal. This higher growth rate can be attributed to several factors. First, natural gas, including unconventional gas, is available in abundant quantities in many parts of the world. Second, natural gas is environmentally cleaner than coal and crude oil. Third, the lower price of gas relative to other fuels makes it attractive to many gas operators and consumers.
Fig. 1 shows the U.S. wellhead prices of gas and crude oil since 1949. These data are wellhead inflation-adjusted prices based on 1992 U.S. dollars on an equivalent-energy basis. The figure shows that a somewhat direct relationship exists between oil and gas prices, with a time lag of 3 to 4 years. In 1949, the gas/oil price ratio was 0.12, indicating that gas was 12% as valuable as oil on an energy basis. Since that time, the trend of this ratio has been generally upward, reaching a value of 0.94 in 1998, indicating that gas has now reached a close price parity with oil.
The gas industry is influenced by political events, economic factors, and its relationship with the oil industry. Fig. 2 shows the U.S. marketed-gas production rate since 1918. The gas-production trend from 1918 to 1970 shows exponential growth. From 1970 to 1973, gas production continued to increase but at a slower rate. Oil production peaked in 1970. Contributing factors to the slowdown in gas-rate increases might have been the oil-production decline, which resulted in a decline of associated gas production and lower gas prices. However, gas-supply shortages occurred during the very cold winter of 1972-73. Actual gas production peaked in 1973, when OPEC cut production of crude oil. Then, gas-production rates dropped, paralleling the decline in oil production. This drop in gas rate extended to 1975 because the gas market was based on long-term gas-sales contracts with stable prices. During 1975-79, gas production showed slow growth and gas prices became more extensively regulated. In 1979, the Iranian revolution caused oil prices to increase sharply, reaching a peak in 1981. This corresponded to an increase of gas prices, which peaked in 1984 (Fig. 1). The oil/gas price time lag of 3 to 4 years possibly resulted from the moderating effect of long-term gas contracts. In 1981, with low gas demand, the "gas bubble" (time period of high gas reserves and production capacity and low demand) and gas production decreased rapidly until 1986, despite the fact that gas reserves and production capacities were high.
Since 1986, gas production increased steadily for a variety of reasons, including government policy and tax incentives, increased gas demand caused by fuel switching and low gas prices, and increases in unconventional gas production.2 Of considerable interest to both producers and consumers is the future direction of U.S gas production. Our recent study3 indicated that Hubbert's model,4–7 which proved useful for oil-production forecasting, does not account for fluctuations in gas-producing rates. Thus, it may not be appropriate for forecasting gas production for the U.S. and a number of other countries. This paper presents new forecasting models for the future gas supply. Our supply models are based on country-by-country production analyses. We also discuss natural gas supply analysis by region and by organization or group.