Natural gas enters new era of abundance: report

08:45, March 10, 2011      

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Technological advances in the production and transportation of natural gas are raising new opportunities for the fuel, but also challenging traditional ways of doing business in gas markets, according to a new comprehensive report released on Wednesday by IHS Cambridge Energy Research Associates (IHS CERA) and the World Economic Forum.

The report, titled "Energy Vision 2011: A New Era for Gas," says that advances in unconventional gas production coupled with growing liquefied natural gas trade are changing long-standing assumptions about natural gas markets around the world.

Energy Vision 2011 includes perspectives from high-level representatives of industry, government and non-governmental organizations, who gathered here at the CERA Week 2011 conference to explore the challenges and opportunities facing the energy world.

This year's conference focuses on policy, markets, technology, price climate concerns and recognition of the sheer scale necessary to support the energy needs of a growing world.

"The unconventional gas revolution is the most important energy development so far this century and it has the potential to boost gas production far beyond North America," said IHS CERA chairman and Pulitzer Prize-winning author Daniel Yergin.

"They can have far-reaching impact on the electric power industry and the fuel choices in the years ahead," he added.

As a result of the shale gas revolution, according to the report, North America has sufficient recoverable gas to meet current levels of consumption for well over 100 years.

Global liquefied natural gas trade doubled in the decade from 2000 to 2010 and is expected to increase another 50 percent or more in the next 10 years, the report says, adding that recent advances in technology mean that natural gas is likely to be more available, and less expensive, than was assumed just a few years ago.

The North American "shale gale" served to slow if not reverse the move toward the convergence of prices and a truly global gas market because North America is much less dependent on liquefied natural gas than was projected just three years ago, disconnecting the market from gas prices elsewhere.

"In the context of a world with increasing demand for energy, gas is playing a critical role," said Roberto Bocca, senior director and head of energy at the World Economic Forum.

Yergin believes that growing demand for liquefied natural gas in Asia brings increasing interconnectedness between Asian and European gas markets.

"With a mostly self-sufficient North American gas market, one should expect an inter-regional, rather than a global, market," he explained.

The surge of gas supply that occurred during the global recession also challenged some long-standing tenets of the world's gas markets, particularly in Europe, the report notes. The traditional linking of gas prices to oil in Europe is nonetheless evolving as long-standing gas suppliers are offering more flexibility in contract terms and pricing to compete with growing volumes of liquefied natural gas.

Natural gas use in power generation, in particular, will be the main source of demand growth in the future, the report says.

Natural gas is the cleanest of the fossil fuels, emitting the least greenhouse gas and other pollutants compared with coal or oil, which makes it a preferred fossil fuel given the imperative to reduce emissions.

IHS CERA, now in its 30th year, is widely considered to be the most prestigious annual meeting of the global energy industry. This year's theme for IHS CERA Week is "Leading the Way: Energy Strategies for a World of Change." The conference concludes on Friday.

Source: Xinhua

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