Tight Gas Market Size, Share & Trends Analysis Report By Application (Industrial, Power Generation, Residential, Commercial, Transportation), By Region, And Segment Forecasts, 2020 - 2027

Report Overview

The global tight gas market demand was 10,441.3 billion cubic feet (BCF) in 2019 and is expected to grow at a compound annual growth rate (CAGR) of 5.02% from 2020 to 2027. Tight gas is a type of unconventional gas that is trapped in a low-permeability source rock deep underground, such as sandstone or limestone. Since the gas is not freely flowing, methods such as hydraulic fracturing or fracking uses high-pressure water injection to break up the source rock and extract the gas. Depleting conventional gas reserves, along with rising energy demand, has resulted in a paradigm shift towards unconventional natural gas reserves, such as tight gas, shale gas, and coal bed methane. In addition, cleaner combustion of tight gas when compared to other fossil fuels, such as coal and petroleum products, is expected to positively influence the demand over the coming years.

Government investments, supporting policies, and subsidies regarding tight gas production have driven the tight gas market in the U.S. Furthermore, the development of technologically advanced techniques in the U.S. is expected to boost the tight gas production over the forecast period.

The U.S. holds a dominant market position owing to the presence of abundant tight gas reserves, advanced drilling equipment, and skilled labor force. Tight gas production and supply in the U.S. are price elastic in nature. The upstream investment in tight gas production is higher during high oil prices otherwise prolonged period of low oil prices results in outright production declines. This trend is expected to lead to uncertain market conditions over the coming years.

The production activity of tight gas requires a substantial amount of water and generates harmful emissions during drilling operations. This has resulted in increasing environmental concerns and significant opposition from the activist groups, thereby hampering the tight gas development across several potential reserves.

Stringent environment-protection regulations, along with long periods of government review and permit issuance, are expected to hinder the market growth over the forecast period. For instance, in June 2019, U.K. based Ascent Resources plc did not receive permits required to re-stimulate production in the company’s existing producing wells including the tight gas reservoirs in the Petišovci field.

Application Insights

The industrial segment emerged as the largest application segment in 2019 with a volume share of 34.2%. The growth can be attributed to the tight gas utilization of several value-added outputs required in the industrial sector. For instance, it is used as a feedstock for the manufacturing of fertilizers, chemicals, and various other commodities. This trend has generated several opportunities for tight gas-rich countries to use this abundant resource in order to expand their industrial output over the coming years.

The power generation segment is expected to grow at the fastest CAGR in terms of volume over the forecast period. This can be credited to the growing trend of coal to gas switching in power plants across several countries worldwide. Lower carbon emissions during tight gas combustion when compared to the combustion quality of other fossil fuels are expected to increase the share of tight gas in the energy mix of several nations.

The residential sector occupied a significant market share in 2019 owing to the wide application base of tight gas across household requirements. The majority of tight gas is used for space heating and water heating in households. The growing use of tight gas in the residential sector has resulted in increased development of the piped natural gas network in order to supply the gas directly to homes.

Tight gas is estimated to gain significant traction as a transportation fuel owing to its ability to reduce harmful exhaust emissions of pollutants and provide cleaner combustion as compared to other conventional fuel sources. Growing demand for low cost and clean transportation fuel in developing economies, such as China and India, is expected to propel the demand.

Regional Insights

North America accounted for the largest volume share of 90.6% in 2019 and is expected to maintain its position over the forecast period, with the U.S. being the major contributor to the revenue growth. Deployment of advanced drilling technologies, along with the presence of several tight gas reserves across the Permian Basin, Anadarko, Niobrara, and Bakken field, is a key factor driving the market across the region.

China is projected to attain a substantial market share over the forecast period owing to the country’s aim to boost domestic natural gas production, along with growing demand for enhancing the energy security across the region. However, the majority of tight gas resources in China are present in the mountainous regions. Such topography increases the drilling costs exponentially, thereby hampering the market growth to a certain extent across the region.

However, in June 2019, the Chinese government extended the existing incentives and issued new subsidies under a subsidy program regarding the production of natural gas from low-permeability tight gas formations. Moreover, active drilling programs across tight gas resources, such as Sichuan and Ordos basins, enhanced the well productivity and lowered the drilling cost per well. This trend will positively influence the industry landscape across the country.

Argentina is estimated to grow at a significant CAGR over the forecast period owing to the presence of technically recoverable tight gas formations. Even though the country’s tight gas production from mature fields has partially declined but continuous development of Vaca Muerta formation is set to bring the production growth on track. For instance, Vaca Muerta accounts for over 20% of the country’s total natural gas production, and only 4% is estimated to have entered the development phase till 2019.

Key Companies & Market Share Insights

The global market is characterized by intense competition and is dominated by large international gas conglomerates that occupy a substantial share across the value chain. Several other industry participants are focusing on continuously developing the local infrastructure for tight gas production and establishing robust connections with local and export customers in order to enhance their foothold in the market over the forecast years. Some of the prominent players in the tight gas market include:

• Chevron Corporation

• Royal Dutch Shell PLC

• ConocoPhillips

• Exxon Mobil Corporation

• PetroChina Company Limited

• Equinor ASA.

Tight Gas Market Report Scope

Segments Covered in the Report

This report forecasts revenue and volume growth at the global, regional, and country levels and provides an analysis on the latest industry trends and opportunities in each of the sub-segments from 2016 to 2027. For the purpose of this study, Grand View Research has segmented the global tight gas market report on the basis of application and region:

• Application Outlook (Volume, BCF; Revenue, USD Billion, 2016 - 2027)

  • Industrial

  • Power Generation

  • Residential

  • Commercial

  • Transportation

• Regional Outlook (Volume, BCF; Revenue, USD Billion, 2016 - 2027)

  • North America

    • The U.S.

    • Canada

  • RoW

    • China

    • Argentina

    • Australia