The message is coming from many reliable sources that we are in the middle of a natural gas glut. The International Energy Agency's (IEA) Annual World Energy Outlook (just released) says that the question is no longer whether a gas supply glut is coming, but how long it will last. This is particularly relevant for North America where 20 years' worth of technology development resulted in substantial addition of gas reserves from oil shale formations. The Henry Hub spot price in October (2010) averaged at 3.45 $/MMBtu and the US DOE Energy Information Administration has just lowered the average gas price for next year to 4.31 $/MMBtu due to upward revisions of production and inventories.
Under these circumstances, it is rational for the electric power industry to look at natural gas as the fuel of choice, but it is puzzling why this fuel is not being utilized more in the transport sector too; electricity could be produced by many other energy resources, but transport is linked exclusively to oil. It would be strategically importance for transport to have a second dominant fuel to rely on.
Natural gas (in transport) can be used in various forms:
1. All grades of liquid fuels (gasoline, diesel, etc.) can be produced from gas through what is called Gas-To-Liquids (GTL) processes. While GTL products may be more expensive, they are certainly less polluting as natural gas has no sulfur and other pollutants. The economics improve when the price differential between oil and gas is high, as it is the case right now. Also, the economics are expected to improve as more GTL facilities are built (economies of scale and learning curve). Another very attractive consideration for GTLs is that they can utilize the same infrastructure to be transported and distributed as the oil-derived liquid fuels; so there is no need for new infrastructure, as it is the case with CNG and LNG (see below).
2. Compressed Natural Gas (CNG) is being used already in buses and taxis in many countries. This choice could be expanded further to private cars.
3. Finally, there are developments to use natural gas in liquid form. This is more challenging (technologically and financially), but it is another choice nevertheless, especially if our planning horizon is more than 10 years.
So, why governments and the industry are not pursuing these options in a much more aggressive way?
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment