Natural gas on track to pass oil worldwide

Natural gas is something of an energy bad boy in the United States, based on wild price swings and high prices, but boosters still say it has a bright future. Largely because of plentiful supply and environmental benefits, natural gas is on track to unseat crude oil as the world's No. 1 fuel of choice in the not-too-distant future, panellists at the Cambridge Energy Research Associates meeting in Houston said.
Some huge reserves now cut off from users, such as in countries like Nigeria, will benefit from zooming growth in LNG and the emerging gas-to-liquids industry, the panellists said. Potential roadblocks -- such as rounding up $ 100 bn in investment money, handling a supply chain that might be 10,000 miles long and public fears about the safety of LNG -- weren't seen as insurmountable.

Natural gas will become the worldwide fuel of choice by around 2025, predicted Malcolm Brinded, group managing director of Shell and CEO of Shell Gas & Power. Natural gas has long been energy's stepchild, but now it is the fastest growing part of the energy business, said John Gass, president of ChevronTexaco Global Gas.
Demand in the United States is increasing at 1 % per year, driven by demand for power generation, Gass said, while in Europe the annual growth in demand is 2 % to 3 %. Global gas demand will double by 2030, according to DavidThomlinson, group CEO, resources, for Accenture.

In the case of LNG, better technology has led to sharp decreases in the cost of liquefying gas and moving it around the globe. The unit construction costs of a new LNG plant have fallen by two-thirds over the past 30 years, he said, while LNG shipping costs have been cut by more than half since 1990. Because it burns cleanly, the climate-change benefits of using natural gas are great. These benefits can be as large as many forms of renewable energy such as wind or solar, Brinded said.
While supply worries have hit consumers in the United States and a section of the North Sea, worldwide sources of natural gas are 50 % larger than crude oil, measured by the estimated reserves. The world has a 60-year supply of natural gas left at current demand, Brinded said.

There is probably that much yet to be found, according to Ralph Alexander, CEO, gas, power and renewable, for BP. Even in the United States, there are plenty of reserves; it's just that they are expensive to recover, Alexander said. There has been relatively little drilling for natural gas, with much of the reserves found accidentally by people looking for oil. Four times as many wells have been drilled for oil as for gas worldwide in the past decade, Brinded said.
Unconventional supply sources that can be tapped include coal bed methane, gas from deep formations and the possibility of methane from hydrates on the floor of the ocean or under ice in northern regions. There's growing hope that natural gas can also be turned into valuable liquids, like diesel fuel, which can be shipped in conventional tankers.
"A whole new gas-to-liquids industry is dawning," Brinded said.

For example, Shell plans a $ 5 bn gas-to-liquids project with partners in Qatar.
The ultra clean fuels that are produced by this technology are particularly attractive in Europe, where diesel-powered automobiles are popular. Diesel fuel made from these liquids, when burned in an advanced engine, results in a significant reduction in emissions, he said.