In Exxon Mobil Corp.'s crystal ball, the future of natural gas is looking increasingly rosy. Global demand for natural gas, commonly used for heating homes and businesses and for generating electricity, will increase 2% a year through 2030, the Texas oil giant says, raising the 1.8% estimate it made last year.
This is no small change. It means that Exxon expects the world in 2030 to burn seven quadrillion British thermal units of gas more than the company predicted a year ago. That's about the same amount of energy consumed by California in a year.
While oil will remain the dominant fuel, even in 2030, gas will have surpassed coal to become the world's second-largest source of energy, supplying 26% of world needs to oil's 32%, according to Exxon's annual Outlook for Energy, scheduled to be released Thursday.
Gas usage is expected to grow three times as fast as that of oil and coal as developing countries scramble to bring electricity to billions of people and rich nations replace aging coal-fired power plants with gas-fired facilities, the report says.
Clean-burning natural gas represents less of a global warming threat than coal or oil. Other low-emitting forms of energy, such as nuclear and renewable power, also are expected to expand their share of the world's energy pie.
Exxon's Outlook for Energy is closely watched, as it underpins the strategy of the world's largest publicly-traded oil company. "It provides the foundation for the different [Exxon] businesses to present their investment plans," says Bill Colton, Exxon's vice president for corporate strategic planning.
It's no surprise that Exxon is enthusiastic about natural gas. The company last year became the largest gas producer in the U.S. when it bought XTO Energy Inc. for $25 billion. XTO was one of several North American companies that perfected a method to extract gas economically by fracturing tight rock formations called shales. Exxon also bought small shale producer Ellora Inc. for $695 million and natural-gas shale assets from Petrohawk Energy Corp. for $575 million.
But Exxon's optimism comes amid some Wall Street criticism of its recent bets on natural gas, which has traded cheaply since the financial crisis started, while oil has surged of late and thus has been more profitable.
Other energy forecasts aren't as bullish about natural gas as Exxon's. The International Energy Agency and the U.S. Energy Information Administration put natural gas's global market share at slightly above 22% in 2030, behind oil and coal in supplying the world's needs.
Natural-gas prices have fallen to about $4.49 a million BTUs this month from above $13 a million BTUs in mid-2008. Oil prices, on the other hand, were trading as low as $40 a barrel in early 2009 as a result of the recession, but have recovered steadily. On Wednesday, crude futures in New York settled at $87.33 a barrel, up $1.14.
Nonetheless, Exxon, which has its roots in John D. Rockefeller's Standard Oil, believes the world is tilting toward a natural-gas dominated future and is preparing to embrace it.
Some other large Western energy companies are heading that direction. Earlier this month, Royal Dutch Shell PLC Chief Executive Peter Voser said in an internal publication the Anglo-Dutch oil giant in 2012 would for the first time produce more natural gas than oil.
Mary Barcella, a consultant with IHS Cambridge Energy Research Associates, says that new technology making shale-gas discoveries economic "is a game changer" that revolutionized the once waning U.S. natural-gas business; Exxon and others intend to take that expertise to other regions of the globe.
Exxon's Mr. Colton says shale and other unconventional types of gas began playing a prominent role in the company's predictions about three years ago, when it realized that a major technological shift had occurred.
Exxon forecasters say that the world will consume about 35% more energy in 2030 than in 2005, driven by population growth and the rapid enrichment of developing nations, especially in the Asia-Pacific region. Mr. Colton's team analyzed statistics for 100 countries and Exxon scientists gauged potentially disruptive technologies, such as electric-car batteries.
Natural gas will quench 26% of the world's demand, up from about 21% in 2005, the report says. That means that gas usage will double from 2000 levels, but a supply crunch is unlikely, due to the newfound abundance of the fuel, says Mr. Colton. "The world is looking at a very robust supply of natural gas," he said.
—Russell Gold contributed to this article.Write to Angel Gonzalez at angel.gonzalez@dowjones.com