Natural gas, called “the prince of hydrocarbons,” is the fastest growing energy source in the world. As the most flexible of all primary fossil fuels, it can be burned directly to generate power and heat, converted to diesel for transportation fuel, and chemically altered to produce a plethora of useful products. Such products include liquid vehicle fuels, fertilizer, chemicals, and plastics. Best of all, it can do all of this at competitive costs and from a plentiful supply, while emitting significantly fewer harmful pollutants than other fuels.
Unlike oil and coal, natural gas cannot simply be loaded on a ship or train for transportation from its source to the consumer. Gas requires expensive pipelines, which are uneconomic over large distances, or complicated conversion systems that either cool the gas into liquid form or modify its chemical composition to allow conversion to other products. Technology advances and declining costs have finally allowed gas to economically overcome these challenges to become the fuel of the future.
Worldwide consumption of natural gas is forecast to double by 2030. The developing economies of Asia, Latin America, and Africa, which have relatively recently discovered the magic of natural gas, will show the highest growth rates. The greatest total volume increases will be in the developed economies of Europe, North Asia, and Asia, which have used natural gas for decades.
This website aims to provide an independent view of natural gas, providing valuable information for both novices and seasoned professionals. Readers wishing to learn more about this subject are invited to purchase the 2006 published book, Fundamentals of Natural Gas, authored by the creator of this website, Vivek Chandra. Readers may also wish to attend an intensive 2 1/2 day Natural Gas Dynamics seminar (see schedule by clicking here) or to arrange for in-house training or consultant service via Kerogen Consultants. Natural Gas Dynamics is an innovative online modular natural gas /LNG course developed by the author. Details can be found at www.naturalgasdynamics.com.
The contents of the site represent the views of its creator without any commercial sponsorship or funding. Comments and suggestions are welcome; please contact the creator at the address listed in the ‘Contact Us’ section of the site.
In less than a year, the Australian LNG landscape has gone from a feeling of euphoria to one of increasing negativity and pessimism. There is no doubt that the pendulum of sentiment tends to overshoot both extremes - the scale of the exuberance of 2010-2012 was, in hindsight, unjustified and unprecedented in the global LNG arena. Similarly, the pervasive pessimism today may be self-destructive if left unchecked. However, I will argue that some degree of caution is the prudent strategy when facing increasing uncertainty, and may be better for the long term competitiveness of the Australian LNG industry.
As the number of future LNG projects - ranging from those under construction to speculative projects in early stages - grows globally, potential LNG buyers, project financiers, investors, partners, host governments, and contractors are struggling to evaluate which projects are more likely to be ‘successful’ projects and thus deserving of their attention.
It has been a few months since my last posting…needless to say, the world of natural gas has been extremely dynamic lately. A couple of key observations…
For this period, I have reproduced a very interesting article by Robin Mills, a Dubai based Energy Economist (and good friend) that was published on June 21 2011. Hope you enjoy it.
For this month, instead of writing my own column, I have taken excerpts from an excellent article “Two Sides to CSG” published recently in ResourceStocks, an Australian information service. Hope you enjoy it.
As I alluded to in my earlier blog, 2009 will be characterised by low gas prices and increased supplies. This will impact all gas markets and both the pipeline and LNG trade. With global LNG supply set to increase by 20% over this year, and faltering demand in most markets, there is no reason to assume that gas prices are likely to rise in the near future.
How the world has changed! In a few short months, the euphoria of the world energy markets has given way to pessimism and foreboding for the future. Energy companies have had to grapple with dramatically reduced revenues (if they were lucky enough to have producing assets) as well as the start-up of expensive projects, most of which were constructed during the past few years when all costs – including labor, steel and other metals, land, and energy – were at historically high levels. A perfect storm of tough times.
There has been much talk recently about gas prices finally rising to the level of oil price parity, on an energy equivalent basis. Energy equivalent price is calculated by dividing oil prices (in $/bbl) by a factor of 5.8 to 6 to give equivalent prices in $/MMBtu.
For many years, this was the norm..oil prices were around $18-$20 /bbl, and LNG import prices in North Asia were around $3 - $5 per MMBtu, with slightly lower prices in US and Europe. In 2006 or so, oil prices started to rise from the sub-$20 / bbl levels. At first, gas prices kept pace with these increases. However, as oil prices crossed the $50 mark, this relationship began to diverge, with gas prices generally (apart from some local peaks) staying below the oil price parity levels.