Forget the gloom about fossil fuels. True, oil is scarce; granted, coal is dirty – but natural gas is clean and plentiful. In terms of local air pollution, gas burns very cleanly indeed.
In terms of greenhouse gases it emits half what coal does, per KWh generated. Unlike oil, or even coal, the world’s gas reserves are expanding dramatically. The coming decades could be a golden age for natural gas, as the International Energy Agency explored in a recent report by this title. However, it is doubtful that Europe will share in this new gas era.
Gas consumption stopped growing several years before the start of the economic crisis and has been declining since. If the current policies and market conditions are sustained, this decline will continue.
In the United States, where conventional (including offshore) gas production had peaked in 2001, the industry developed new technologies to access a resource base most expert thought could never be produced economically: shale gas. The decline was reversed in 2005 and since then US gas production has grown by about 45%. The annual production rate has grown by 220 billion cubic meters (bcm), the equivalent of total consumption rate by the UK, Germany and France together, or 45% of total EU gas consumption. This “shale gas revolution” has spread to Canada and the industry is scrambling to access prospective territories all over the world where it could apply the same technologies to similar geological structures. There are many such structures, from South America to China, from Europe to Africa. We are perhaps on the eve of a global methane revolution driven by ‘unconventional gas’.
The shale gas boom combines with another major development of the last few years: the expansion of an international market for ship-borne, liquefied natural gas (LNG). LNG trade started in the late 1960s and has grown regularly since but it is only in the late 1990s and 2000s that it became the default way to commercialising natural gas. A step-change has been achieved with the entry of Qatar into this market. In less than a decade the tiny Middle East country added about 100 bcm (equivalent) of supply to the global LNG market. The new emerging giant supplier is Australia, which should overtake Qatar as largest LNG exporter by 2018. Some of Australia’s LNG export projects are fed with ‘coal-bed methane’, another form of unconventional gas.