HRN has repeatedly written about the emerging long term importance of natural gas in today’s “going green” economy. And it seems that the natural gas industry itself has started to realize their new found importance as well and started to collectively promote natural gas as a low carbon “bridge fuel”. Natural gas has now reached a level of importance that makes it critical and indispensable as an energy commodity.
It is only a matter of time before carbon begins to carry an internationally accepted cost. This cost will then be levied on all products and services that produce carbon emissions in delivering their product or service. This will effectively make low and zero carbon energy more affordable and more price competitive against oil and coal.
There are three key areas that have changed
Low Carbon fuel – natural gas emits 50% less carbon then coal and 30% less then oil (gasoline, diesel). In the “green economy” natural gas is undeniably the cleanest fossil fuel and will only increase in importance to countries wanting to reduce carbon emissions and remain competitive in a market where carbon carries a heavy cost.
Unconventional Gas – the fundamentals of natural gas as a long term energy resource have dramatically changed. Shale gas in the Horn River basin is estimated at up to 600 Trillion cubic feet in place. Technology continues to improve and continues to reduce the overall cost of extracting the natural gas from the shale formations.
Liquified Natural Gas (“LNG”) – an international network of LNG terminals and freighters expands the market for natural gas producers and makes natural gas a global commodity like oil and coal. A global market will have a major impact on the natural gas industry and will potentially settle the price fluctuations.
At the 24th World Gas Conference (“WGC”) in Buenos Aires, Argentina, natural gas producers are relishing in their new found importance in the global energy marke but recognize the challenges it faces with a global recession supressing demand.
At the conference, George Kirkland, Chevron Corp.’s vice president for global upstream and gas told the stated;
“The fact is – natural gas has come of age. What was once a second prize to oil is now a premium commodity.”
Kirkland referrred to an International Energy Agency (“IEA”) report that has estimated that global demand for natural gas to increase by 50% by 2030 and that in order to meet such a demand increase would require investments of about $227 billion a year over the next 20 years, or a total of $5.5 trillion. Kirkland went on to state;
“Without continued investment, natural gas will simply not be available to meet demand and drive economic growth.”
Kirkland expressed optimism that natural gas would play a major part in the global energy matrix going forward, especially in light of the need to reduce emissions and sees natural gas will be a larger part of Chevron’s future growth.
“I am confident that the importance of natural gas to the world’s energy portfolio will continue to grow. And I am confident that natural gas will redefine the world’s energy equation in the 21st Century.”
Rune Bjørnson, Vice President for Natural Gas at StatoilHydro, added his voice to the growing momentum supporting natural gas as a key energy source to reducing carbon emissions.
“I see natural gas as an important vehicle into a low-emissions future. Gas contains less carbon than oil and much less than coal,” stated Mr. Bjørnson.
Canada is a major natural gas producer and should play close attention to the growing importance being placed on natural gas globally. Canada needs to leverage this valuable low-carbon resource through increased domestic use of natural gas and decreased use of oil and coal in electricity generation and transportation. Canada is a net exporter of natural gas. It can easily increase its domestic usage of natural gas in a coordinated effort to reduce carbon emissions and still have surplus available for export. If Canada does not increase the use of this valuable domestic low carbon resource, it will be exported to the competitive benefit of other countries.
Los Angelas Times: Natural Gas to play bigger role at Chevron