Natural gas is one energy sector which is looking much better than oil at the moment. A sector growing much faster than wind and solar power. A sector which doesn’t require any government legislation (like Cap-and-Trade) to make it economically viable. And one that has China, ExxonMobil, and other deep-pocketed energy heavyweights cutting multi-billion dollar checks every few months.
Natural gas is not a renewable energy source, but it merits attention here for two reasons: (1) It is available in abundance in countries such as United States that are the largest consumers of energy, and (2) It is much less polluting than competing fossil sources such as coal and oil.
Natural gas comprises primarily of methane, and gas is typically found in
- Gas fields, most of which are offshore
- In coal beds (called coal bed methane – CBM)
- In the form of shale gas (found inside shale rocks)
- In the form of methane hydrates.
Uses of natural gas
Natural gas is currently being used for both heating and to produce power in thermal power plants. When used in a power plant, natural gas produces 50% less CO2 than the case when coal is used as the main fuel.
Owing to its form, natural gas can be transported to large distances at low cost, compared to coal, thus making it more attractive for many power plants located away from the source of gas. While newer sources of natural gas such as shale gas do increase the attractiveness of this resource for many countries, the total costs of obtaining the gas in its final form in not fully known, and it could be much higher than that of natural gas from more traditional sources such as offshore locations.
Natural gas production and consumption scenario
The thing about natural gas is the Asian countries which consume the most produce very little of it. The chart here of Japan’s natural gas consumption and production is the perfect example of what is happening in other countries like South Korea and China.
Meanwhile, the countries which have a lot of it – Australia, Papua New Guinea, and Indonesia – are capable of producing far more than they are able to consume.
The only realistic solution is more and more LNG imports.
The Middle East continues to move into the LNG market too. In 2009 the Ras Laffan LNG Company in Qatar announced its latest LNG project has come on line. This project matches the largest LNG production in the world.
Shale gas – New source of natural gas
With clean energy still a top priority, Americans have begun heralding shale gas as a cheap and clean transitional fuel to renewable energy.
Critics of natural gas argue that shale gas drilling is dangerous. Marcellus Shale -- which stretches under Pennsylvania, New York, West Virginia and Ohio -- has become the centre of focus of many oil & gas companies and is seeing a growing number of complaints due to the risks of contamination of water reserves in the area. In fact activist shareholder groups announced they have filed resolutions with nine oil and gas companies that use hydraulic fracturing, or "fracking," to extract gas from shale formations thousands of feet underground. Drilling is booming in Pennsylvania and West Virginia but New York has restricted drilling until environmental questions about the potential threat of the technology can be answered.
Natural gas vehicles
Natural gas offer the same benefits of gasoline- and diesel-powered vehicles, but provide more advantages by running on a clean, affordable fuel that can help a country create jobs and reduce their dependence on foreign oil.
The scale up of natural gas as a transportation fuel will create much needed jobs and businesses to help move the economy forward. Domestic automakers can continue to build all sizes of vehicles because natural gas can power everything from semitrucks to small performance cars. Auto manufacturing plants can continue to produce all models of vehicles by only altering the fuel system during assembly. Plus, the economic savings for cities and states with the use of CNG can lead to a reduction in fuel costs for school and transit buses, as well as sanitation vehicles.
Natural Gas is Affordable: The process of producing natural gas and compressing it for transportation is more energy efficient than other alternative fuels. When compared to the market price of gasoline and diesel, natural gas prices have remained more stable over the past several years.
Worldwide, there were roughly five million natural gas vehicles in 2006, with the largest number of natural gas vehicles to be found in Argentina, Brazil, Iran, Pakistan and Thailand. In Europe the natural gas vehicle is a particularly popular choice in Germany and Italy.
Pike Research has conducted an in-depth assessment of the opportunities and challenges facing the 12.6 million unit NGV market, which they forecast will expand at a compound annual growth rate (CAGR) of 7.9% to reach 19.9 million vehicles by 2016. Natural gas refueling station development is not expected to achieve the same growth rate, but will reach nearly 26,000 stations worldwide by 2016.
Natural Gas support has been on the upswing in recent days as safety and health concerns brought to light by the shutdown of the Japanese Fukushima Daiichi nuclear facility has soured public sentiment on nuclear energy. Support for natural gas was on the upswing long before the tragic events in Japan. Last year, reports from the Energy Department determined that the cost of producing a kilowatt-hour of power with natural gas is less expensive than nuclear, coal, wind and solar.
Sustainability in the long run
Over the long run, natural gas will become a more suitable alternative to oil. Based on energy to price value, natural gas is as cheap as it has been in the past decade. It will take time – probably a lot of time – but natural gas’ time to shine will come again. Oil may be a 50/50 bet at this point, but the long-term outlook for natural gas is very bright. You just have to be selective about how you’re going to go about profiting from it.
- If newer sources of natural gas such as shale gas and methane hydrates are considered, natural gas is a fossil fuel found in abundance in many parts of the world, thus increasing the self-reliance of many large nations for their own fuel
- Natural gas, when used in power plants, is a much more clean fuel than coal.
- Owing to its form, natural gas can be transported to large distances at low cost, compared to coal, thus making it more attractive for many power plants located away from the source of gas.
- Natural gas is ultimately a fossil fuel and thus is not a replenishable resource.
- While newer sources of natural gas such as shale gas do increase the attractiveness of this resource for many countries, the total costs of obtaining the gas in its final form in not fully known, and it could be much higher than that of natural gas from more traditional sources such as offshore locations.
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