As the world enters an era of tighter gas markets, the liquefied natural gas (LNG) industry promises hope, with new gas basin discoveries, innovative financing models and technological advances that improve supply to meet growing demand. These developments provide opportunities for trade and a move towards a cleaner energy standard.
Industry pundits agree: 2013 will be a turning point for the industry, as it will be the year…
…that natural gas becomes a global foundation fuel
Clean, safe and efficient, natural gas is growing rapidly as a segment of the energy market. Parallel to this is the rising demand for LNG, which is forecast to rise at a rate of 4.6 percent annually, higher than the 2.1 percent annual growth rate enjoyed by global gas.
Discoveries of massive offshore gas deposits in Mozambique and Tanzania, shale gas development in North America and China, and increased production capacity in Australia, will allow natural gas to cement its position as a foundation fuel in a world increasingly concerned with energy security and sustainability. BP predicts Asian LNG demand will grow around twice as fast as the global average between now and 2030.
…that the global gas market becomes interconnected
Natural gas markets have traditionally been divided along a regional basis with little trade between regions. However, as more countries enter into importing and exporting natural gas, these markets have grown increasingly interconnected.
Strategically, LNG offers a compelling proposition to gas-consuming nations reliant on piped imports (Europe receives 80 percent of its gas imports through pipelines from Russia, Algeria and Norway). Unlike pipelines, which start and end at fixed points, LNG can be shipped from and to virtually anywhere. The latest LNG plants are 30 times the size of the first ones constructed in the 1960s, and LNG carrier capacity is also increasing. The International Gas Union forecasts that global regasification capacity should reach 680 million tonnes a year by 2015, up from 572 million tonnes a year at the end of 2010.
…that innovation rules the day
Accessibility is one of the primary challenges faced in the natural gas industry, particularly in “stranded” gas fields where pipelines are not feasible. Without the capacity to liquefy and transport the natural gas, the potential of such fields remains untapped. Additionally, pipeline developers routinely face numerous political and commercial hurdles, on top of financing and engineering difficulties.
Much as the oil industry moved from fixed onshore plants to floating production, storage and offloading vessels, leaders in the field are developing new floating liquefaction facilities for natural gas. The facilities allow the gas to be processed at the site, with LNG carriers moving the products directly from the facility to markets worldwide. These facilities can be moved more easily than onshore plants, allowing access to gas fields that are either too small or remote to be economical otherwise.
Royal Dutch Shell began constructing the world’s largest floating LNG vessel, which is expected to be the first of many around the world. It is expected to produce at least 3.6 million tonnes of LNG per year from 2017. Lloyd’s Register, a classification society, has seven such facilities on its radar in various regions – including those in South America, Africa and Malaysia.
…that transportation switches gear to natural gas
With oil prices at an all-time high, LNG is an attractive alternative for transportation fuel. It also has the advantage of producing far less emissions. Det Norske Veritas (DNV), a classification society is developing an oil supertanker fuelled by LNG. Its Triality concept would emit 82 percent less nitrogen oxide (NOx), 94 percent less sulfur oxide (SOx) and 94 percent less particulate matter. Concurrently, Korea Gas Corporation (KOGAS) is using LNG instead of heavy bunker fuel, which could reduce greenhouse gas emissions by 20 percent.
On land, government policies geared towards sustainable energy and a cleaner environment will provide an additional push to the development of the infrastructure needed for natural gas vehicles.
…that the number of spot contracts increase
While in the past, long-term contracts lasting 20 years were the order of the day, today spot trade has become a hot topic, as buyers are confident about investing in some liquefaction capacity, allowing them to procure ‘on demand.’ The spot market allows LNG to be delivered to the highest paying bidder at any given time. Charter rates for the world’s 372 LNG tankers have shot up, ahead of growing global demand.
Hear more about the future of LNG at LNG 17
At LNG 17 – the largest global gas event in 2013 – over 5,000 senior decision makers, key technical, leading commercial and strategic experts from over 80 countries are expected to congregate to address the most significant trends, challenges and opportunities facing the LNG industry today and in the future.
LNG 17 is held under the auspices of the International Gas Union (IGU), Gas Technology Institute (GTI) and International Institute of Refrigeration (IIR), and is hosted by the American Gas Association (AGA).
