New Articles

The Future of Natural Gas in the World of Energy

energy

The Future of Natural Gas in the World of Energy

Over the last two decades, natural gas has gradually and consistently etched its place as a critical player in the global energy supply chain. As natural gas gains prominence, the demand for other fossil fuels has either stagnated or declined. The use of coal, for example, has declined consistently over the last 3 decades. Within the same timeframe, the demand for natural gas has grown slowly but steadily. That’s impressive considering the volatility of the energy market over the recent past. But now that the energy sector is trying to abandon fossil fuels in favor of cleaner, renewable energy sources such as solar and wind, what’s the future of natural gas? 

Natural Gas as the Bridge Fuel to a Sustainable Future

The goal is to replace coal and other harmful fossil fuels with renewable energy sources. However, the energy sector is yet to build the necessary wind, solar, and hydropower infrastructure for a stable renewable energy supply. There has to be a transition fuel to cover the deficiencies of renewable energy. Natural gas stands out as the most reliable transition fuel; it will for the next couple of decades help the world edge closer to the goals of the Paris Agreement.

However, transporting natural gas is a huge logistical challenge because gas can only be distributed by pipelines. But natural gas fields are scattered all over the world, most of them being far away from the towns where the end users live. To make it easier to transport by road and sea, and to store it safely, natural gas is liquefied at -162°C to turn it into liquid (liquefied natural gas or NLG). It is then re-gasified and piped to the end user via pipelines.

LNG is a cleaner alternative to coal and oil because, when burning, it emits the least conventional air pollutants among all fossil fuels. Its carbon and sulfur dioxide emissions, as well as dust and other particulates, are significantly fewer than burning coal or oil. Its combustion technology is also far more advanced than the best available coal technology.

Critics of LNG raise concerns about its high methane content, which is between 85%-95%. However, LNG companies around the world have proved their ability to police methane leaks even without regulatory pressure. Most of these companies have invested heavily in leak detection technologies that track and report leakages for speedy interventions.

UNEP’s Emissions Gap Report calls for a rapid transformation of the energy sector in order to contain a full-blown climate crisis. This will be possible by 2030 with LNG as a transition fuel. LNG can be used for electricity production, as a fuel for trucks, and for household heating.

What’s the Future of LNG in a Renewable Future?

Even when solar and other renewable energy sources will be sufficient to satisfy the global energy market, countries will still have to invest in natural gas. This is because transitioning to wind and solar cannot replace fossil fuels in aviation and marine shipping. Industrial sectors, e.g. iron smelting, will still be dependent on fossil fuels many decades from now. If fossil fuels cannot be fully replaced by renewable energy, then LNG has to be the fossil fuel that the world has to fall back to. It’s cleaner and more reliable, after all.

Notable Projects Shaping the Future of LNG

The LNG industry has shown resilience in the face of criticism by doubters and 2 years of pandemic-driven disruptions. The sector is still strong and the demand for LNG is on an upward trajectory. Investors in the sector are investing millions of dollars into modernizing LNG facilities in anticipation of a future LNG boom.

Atlantic, Gulf & Pacific International Holdings (AG&P) is making huge strides in India’s LNG market. The downstream LNG development company has been a huge revelation in the Asian energy sector over the last decade. The company is now partnering with the Japan Overseas Infrastructure Investment Corporation for Transport & Urban Development to invest up to $120 million in new LNG projects in India. The Singapore-based company, under the brand name AG&P Pratham, is on a mission to revolutionize India’s city gas distribution network. The focus of CEO Joseph Sigelman is to create an uninterrupted supply of LNG, compressed natural gas (CNG), and piped natural gas (PNG) for Indian industries and households.

North Field Expansion Project in Qatar is another LNG project for the future. The existing infrastructure produces 77 million TPY (throughput yield) of LNG, with the expansion set to increase production to 110 million TPY by 2025. Consequently, Qatar will become the largest LNG exporter globally and a leader in Asia’s green energy transition. In Africa, Mozambique LNG is investing in offshore LNG projects in Mauritania and Senegal that will play a critical role in West Africa’s transition to a sustainable energy future. Lastly in Croatia, Hrvatska LNG recently launched the Krk Island LNG Terminal that’s touted to spearhead the energy transition in southeastern Europe. The new facility has an estimated storage capacity of 2 million TPY. 

Final word

The future of LNG is bright. With the power of incumbency as a long-serving fuel in many countries, LNG will give renewable energy sources a run for their money for a long time. Besides, LNG delivers environmental benefits that can aid the world in its pathway to a lower-carbon future. 

 

consortium urea bakken

Urea Prices Spike by 46% in October Following Natural Gas Cost

Urea price soared by +46% in October 2021, reaching $612.5 per tonne, according to the latest World Bank’s data. The spike was caused by a sharp slump in the world’s production, as many producers have suspended manufacturing owing to skyrocketing natural gas prices and energy resource shortages. Russia, China and Egypt remain the key urea suppliers, while India, Brazil and the U.S. lead the world import ranking. 

Global Urea Price Trend 

According to World Bank’s data, from September 2021 to October 2021, the global urea price jumped from $418.75 per tonne to $612.5 per tonne. Since the beginning of this year, the global price increased more than twofold, from $265 per tonne in January to $612.5 per tonne in October. In 2020, the global average urea price estimated at $229.1 per tonne. The rapidly growing cost of energy resources, primarily natural gas, has not only led to a rise in urea cost but has also resulted in the work suspension of fertilizer manufacturing plants around the world.

Global Urea Exports by Country

Global urea exports fell to 48M tonnes in 2020, declining by -2.9% y-o-y. In value terms, urea exports dropped from $14.5B in 2019 to $12.7B in 2020.

Russia (7.3M tonnes) and China (5.5M tonnes) represented the key exporters of urea in 2020, recording approx. 24% and 18% of total exports, respectively. It was distantly followed by Egypt (3.1M tonnes), Indonesia (2.4M tonnes), Malaysia (2.1M tonnes) and Ukraine (1.5M tonnes), together creating a 30% share of total exports. The following exporters – Poland (1.3M tonnes), the Netherlands (1.3M tonnes), Germany (1.2M tonnes), Canada (0.8M tonnes) and the U.S. (0.8M tonnes) – together made up a further 18% of the total exports.

Over the last year, urea exports from Russia and China rose by +4.5% y-o-y and +10.2% y-o-y, respectively, while the supplies from Egypt dropped by -29%.

In value terms, Russia ($1.5B), China ($1.4B) and Egypt ($891M) constituted the countries with the highest levels of exports in 2020, with a combined 51% share of global exports.

World’s Leading Urea Importers

In 2020, India (11M tonnes), distantly followed by Brazil (7.1M tonnes), the U.S. (4.5M tonnes), Turkey (2.5M tonnes), Australia (2.4M tonnes) and Thailand (2.4M tonnes) represented the major importers of urea, together committing 63% of total imports. Mexico (1.4M tonnes), France (1.4M tonnes), Argentina (1.1M tonnes), Spain (0.9M tonnes), Italy (0.9M tonnes), the U.K. (0.9M tonnes), and South Korea (0.8M tonnes) followed a long way behind the leaders.

In value terms, the largest urea importing markets worldwide were India ($2.9B), Brazil ($1.9B) and the U.S. ($1.2B), with a combined 47% share of global imports.

Source: IndexBox Platform

natural gas

States That Consume the Most Natural Gas

As the world navigates the effects of climate change, policymakers are looking for strategies and investments to reduce carbon emissions and slow global warming. Global leaders met in Glasgow earlier this year to negotiate new targets for greenhouse gas reduction and climate change mitigation. In the U.S., investments in clean energy and the electric grid were a major component of the $1.2 trillion infrastructure package that Congress passed and President Joe Biden recently signed into law.

As policymakers work to reduce emissions, natural gas occupies a unique position in the U.S. energy mix. In recent years, widespread adoption of extraction techniques like hydraulic fracturing have made natural gas cheaper to produce. This has made natural gas an economically viable, cleaner-burning alternative to other heavy-emitting fossil fuels like coal. But natural gas does still produce carbon emissions, and as clean energy sources like wind and solar themselves become less expensive, the future of natural gas is uncertain.

Progressive governments with a focus on reducing carbon emissions, like California at the state level and Seattle at the local level, have enacted new building codes to discourage or restrict the use of natural gas in new construction. Simultaneously, states that have benefited from the natural gas boom, like Texas, Oklahoma, and Louisiana, have banned municipalities in their states from enacting similar policies.

For now, the boom in production means that the U.S. is currently a net exporter of natural gas, producing more natural gas than it consumes. Production and consumption closely tracked together up until the mid-1980s, at which point consumption rose above production levels and natural gas imports increased. With the rise of fracking in the early 2000s, this trend began to reverse, and by 2017, natural gas production overtook consumption in the U.S., and the country became a net exporter.

But the greatest production increases have been limited to a handful of states. Texas has been a longtime leader in U.S. energy production due to its plentiful oil and natural gas reserves, and the state currently produces 8,288 trillion BTUs each year. Pennsylvania is a more recent beneficiary of the natural gas boom. Natural gas was difficult to extract in the state until horizontal drilling became common around 2008, but Pennsylvania quickly grew to become the second most productive state for natural gas. Texas, Pennsylvania, and other states that have reaped the economic benefits of expanded natural gas production may be most resistant to any transition away from natural gas as an energy source.

Beyond the interests of states that produce a high volume of natural gas, transitioning away from natural gas will also be difficult for states where natural gas is one of the primary sources of energy for consumers. Some states derive more than half of the energy they consume from natural gas, led by Alaska at 57.6%. These states will require affordable alternative energy sources at a wide scale before a transition will be possible.

The data used in this analysis is from the U.S. Energy Information Administration and the U.S. Census Bureau. To determine the states consuming the most natural gas, researchers at Commodity.com calculated total natural gas consumption per person. Researchers also included statistics on total natural gas consumption, the percentage of total state energy consumption derived from natural gas, and the percentage of total U.S. natural gas consumption accounted for by each state.

Here are the states consuming the most natural gas.

State Rank Natural gas consumption (million Btu per person) Total natural gas consumption (trillion Btu) Percentage of total state energy consumption Percentage of all U.S. natural gas consumption
    Alaska     1 484.3 354.3 57.6% 1.1%
    Louisiana     2 425.9 1,979.8 46.1% 6.2%
    Wyoming     3 287.5 166.4 30.8% 0.5%
    Oklahoma     4 217.8 861.8 51.4% 2.7%
    Mississippi     5 195.0 580.2 53.4% 1.8%
   North       Dakota     6 189.5 144.4 21.6% 0.4%
    Texas     7 164.8 4,779.5 33.6% 14.9%
    Alabama     8 152.6 748.1 38.9% 2.3%
    New Mexico     9 145.5 305.1 41.5% 0.9%
    Indiana     10 138.7 933.9 33.6% 2.9%
    Iowa     11 137.0 432.1 26.4% 1.3%
     West Virginia     12 132.8 238.0 28.8% 0.7%
   Pennsylvania     13 130.6 1,671.3 43.8% 5.2%
    Arkansas     14 123.0 371.1 33.9% 1.2%
    South Dakota     15 110.1 97.4 24.2% 0.3%
   United States     – 98.0 32,169.8 32.1% N/A

 

For more information, a detailed methodology, and complete results, you can find the original report on Commodity.com’s website: https://commodity.com/blog/natural-gas-consumption/

green hydrogen

The European Hydrogen Market Benefits from Economic Recovery and Rising Demand for Alternative Fuels

Increasingly stringent environmental legislation and the emergence of new gigawatt-scale electrolyzers indicate that hydrogen fuel boasts the future potential to develop as a strong competitor to traditional energy resources.

Key Trends and Insights

EU hydrogen production declined sharply in April 2020 by -15% against March figures, due to lockdown and stagnation in the chemical industry. Production only recovered in Q4 and continues to increase as of the beginning of 2021.

189 countries are now committed to reducing greenhouse emissions under the terms of the Paris Agreement, indicating that the demand for sustainable fuels will increase. The hydrogen market demonstrates tangible prospects: hydrogen, irrespective of its current high production costs, constitutes an excellent sustainable fuel due to the fact that when being combusted, it transforms to just water, without any harmful exhaust gases or carbon.

In July 2020, the European Union adopted the EU Hydrogen Strategy, to promote the widespread use of hydrogen as an alternative fuel, and conducted research into hydrogen production in Europe to determine investment opportunities from 2020 to 2050. The European Clean Hydrogen Alliance was established at the same time to connect industry, government authorities and the public. A dedicated regulatory and legal framework, specifically the Trans-European Networks for Energy (TEN-E) and The Connecting Europe Facility (CEF) initiatives should further promote the use of hydrogen from the perspective of alternative energy.

In addition to the European Union, Japan, South Korea and New Zealand, amongst others, have already adopted their own hydrogen strategies. The UK carbon-free energy plan also envisages an increased role for hydrogen fuel, while in the U.S., a targeted program has yet to be developed.

Encouraged by the latest technological developments, commercial interest in hydrogen fuel increased over the past year. 96% of global hydrogen output is still generated from natural gas; this process emits considerable volumes of greenhouse gases. The production of ‘green’ hydrogen through water electrolysis represents a sustainable alternative to this synthesis method. The emergence of gigawatt-capacity electrolysis facilities will reduce production costs and make hydrogen more accessible.

The Netherlands Features the Largest Volumes of Consumption and Exports

Hydrogen consumption rose to 8.1B cubic meters in 2019, picking up by 3.8% on the previous year’s figure. The total consumption volume increased at an average annual rate of +1.9% from 2007 to 2019. The growth pace was the most rapid in 2008 with an increase of 26% against the previous year (IndexBox estimates).

The size of the hydrogen market in the European Union declined to $1.4B in 2019, approximately equating the previous year. This figure reflects the total revenues of producers and importers (excluding logistics costs, retail marketing costs, and retailers’ margins, which will be included in the final consumer price). In 2020, the value of the European hydrogen market was estimated at approx. the same figure (IndexBox estimates). .

The countries with the highest volumes of hydrogen consumption in 2019 were the Netherlands (2.6B cubic meters), Germany (2B cubic meters) and Spain (1.1B cubic meters), with a combined 70% share of total consumption. France, Finland, Italy and Hungary lagged somewhat behind, together comprising a further 24%.

From 2007 to 2019, the most notable rate of growth in terms of hydrogen consumption, amongst the key consuming countries, was attained by Finland, while consumption for the other leaders experienced more modest paces of growth.

The Netherlands represented the key exporter of hydrogen in the European Union, with the volume of exports reaching 301M cubic meters, which was near 73% (IndexBox estimates) of total exports in 2019. It was distantly followed by Belgium (78M cubic meters), mixing up a 19% share of total exports. Germany (14M cubic meters) held a little share of total exports.

The Netherlands was also the fastest-growing in terms of hydrogen exports, with a CAGR of +9.9% from 2007 to 2019. At the same time, Belgium (+1.4%) displayed positive paces of growth. Germany experienced a relatively flat trend pattern.

Source: IndexBox AI Platform

energy exports

U.S. States that Export the Most Energy

The energy economy in the United States has been transformed over the last 15 to 20 years, reducing reliance on some traditional fuel sources while bringing others to the forefront.

The main factors driving this shift have been the increased use of natural gas and renewable energy. The emergence of fracking has reduced the costs of natural gas extraction and led to a boom in domestic production over the past couple of decades. Simultaneously, new innovations in renewable energy sources like solar and wind power have reduced costs and made these alternatives more viable at scale. With the adoption of natural gas and renewables, production and consumption of formerly predominant sources like oil and coal have leveled off or declined.

This transition has also shifted the U.S. political economy around energy. Nationally, political figures have called for U.S. energy independence from imported foreign fuel resources for years, hoping to reduce reliance on other nations in the event of geopolitical conflicts. Because of the U.S.’s increased production of domestic energy sources, the country has made rapid progress toward that goal in recent years.

In 2019, the United States was a net exporter of energy for the first time since 1957, meaning that it produced more energy than it consumed. With a sharp increase in production over the past twenty years, production has begun to catch up with consumption and exports with imports. The nation’s net imports of coal and coke, natural gas, and petroleum have all fallen below zero, leaving only crude oil as a major fuel import—and even imports in that category are showing a decline.

Within the U.S., states have different levels of production and consumption affecting their import and export levels as well. While some states—especially those who produce coal in large numbers—have suffered in the transition between fuels, others have dramatically increased their energy production. As a result, these states are now producing far more energy on a per capita basis than peer states are.

This is particularly true for two of the states at the front of the natural gas boom, Wyoming and North Dakota. These states lead the nation in both total energy production on a per capita basis, a function of both their high levels of production and their low populations.

Interestingly, Wyoming and North Dakota are among the nation’s leaders in per capita energy consumption levels as well. One of the reasons is that extracting and refining fuel is itself an energy-intensive process—which is why some of the other leading states for energy consumption per capita are also major fuel producers, like Alaska and Louisiana.

Despite their high consumption levels, leading states Wyoming and North Dakota nonetheless have the highest net energy exports per capita, followed by other major energy producers like West Virginia, New Mexico, and Alaska. To find these locations, researchers at Commodity.com used data from the U.S. Energy Information Administration’s Electric Power Annual Report and ranked states based on their net energy exports per capita—calculated as the difference between per capita production and consumption.

Here are the states that export the most energy.

State Rank Net energy exports per capita (million Btu) Total energy production per capita (million Btu) Total energy consumption per capita (million Btu) Net energy exports (trillion Btu) Total energy production (trillion Btu) Total energy consumption (trillion Btu)

 

Wyoming     1     12,368.3 13,335.4 967.1 7,158.3 7,718.0 559.7
North Dakota     2     4,677.5 5,549.4 871.9 3,564.6 4,229.0 664.4
West Virginia     3     2,200.0 2,661.6 461.6 3,942.7 4,770.0 827.3
New Mexico     4     1,301.0 1,636.8 335.8 2,727.9 3,432.0 704.1
Alaska     5     1,099.3 1,928.8 829.5 804.2 1,411.0 606.8
Oklahoma     6     800.4 1,233.5 433.1 3,167.2 4,881.0 1,713.8
Montana     7     522.5 932.8 410.3 558.5 997.0 438.5
Pennsylvania     8     392.5 702.0 309.5 5,024.8 8,987.0 3,962.2
Colorado     9     370.0 635.9 265.9 2,130.8 3,662.0 1,531.2
Texas     10     206.2 704.3 498.1 5,978.2 20,421.0 14,442.8
United States*     2.7 307.8 305.2 873.0 101,038.0 100,165.0

 

For more information, a detailed methodology, and complete results, you can find the original report on Commodity.com’s website: https://commodity.com/blog/states-export-most-energy/

LNG supply chain

Qatar’s Strategies Towards Building a Sustainable and Resilient LNG Supply Chain

According to Exxon Mobil’s Outlook for Energy (2017), the global market for natural gas (NG) should expand by around 45% over the next 20 years with demand for liquefied natural gas (LNG) expected to grow by more than 2.5 times within the same period. Acknowledged as a low carbon-intensive fossil fuel, natural gas is a cleaner, environmentally-friendly, and sustainable option for energy transition that reduces the use of high carbon-intensive fossil fuels, such as coal and crude-oil distillates. Natural gas is also ideal for increasing energy efficiency on the basis that energy release per mass during NG combustion is the highest amongst fuels (fossil- and biomass-based). Moreover, the amount of energy produced from renewables cannot supply global demands for a complete replacement of fossil fuels.

Accordingly, the LNG market is becoming highly competitive with more than 20 countries already supplying customers around the world. Major suppliers currently include Qatar, Australia, Malaysia, Russia, United States, Nigeria, Indonesia, Algeria, Egypt, to name but a few. Increased capital expenditure in the sector is coming and new LNG players are expected to enter the market in the years ahead. These include countries around the Eastern Mediterranean; the United States Geological Survey (U.S. Geological Survey Fact Sheet 2010 – 2014) estimates that the Levant Basin (involving Cyprus, Egypt, Israel, Lebanon, Palestine, and Turkey) contains 122.4 trillion cubic feet of technically recoverable gas.

In such a competitive environment, Qatar managed to maintain its position as the largest LNG exporter in the world (at 77.8mn tons) in 2019 (2020 World LNG Report), and is massively investing to preserve its role as the main global player. Qatar’s future strategies not only include the expansion of production capabilities by around 64% by 2027 to reach 126 million tons of LNG per annum (The Peninsula Qatar, 2019), but also its shipping capabilities through investment in a new fleet of LNG carriers. For instance, on June 1 this year, Qatar Petroleum announced the signing of the largest LNG shipbuilding agreement in history to secure more than 100 ships valued in excess of QR 70 billion to cater for its LNG growth plans (The Peninsula Qatar, 2020). Additionally, Nakilat, the shipping arm of Qatar’s LNG, will significantly increase its current 15% share of the global LNG fleet carrying capacity and will remain the largest owner of LNG carriers in the world for the coming decades.

This strategic investment will propel Qatar from being the world’s largest LNG exporter and producer to a globally-recognized champion of LNG supply chains. As things stand, an LNG supply chain commonly consists of three main links: exploration and production; treatment and liquefaction; and shipping and distribution. Expanding shipping capabilities will definitely strengthen the third link of Qatar’s LNG supply chain, whereas the first two links are already very well established.

By owning and controlling the whole LNG supply chain, Qatar has acquired a significant competitive advantage and moved further ahead of the competition in the LNG market. For instance, by owning independent shipping capabilities on top of well-established production and liquefaction facilities, Qatar will be better prepared and ready to respond to future unexpected risk events. Crucially, the country will also be able to recover quickly from any potential disruptions.

Accordingly, Qatar is building one of the most effective and resilient LNG supply chains in the world. The resilience of the country’s LNG supply chains will also increase international buyers’ trust and confidence in Qatar as a reliable LNG exporter. This reputation will in turn consolidate Qatar’s actual portfolio and help earn new market share. Being seen as a reliable supplier is extremely important in a business environment driven by oil-indexed long-term contracts of 15-25 years. Moreover, being the largest owner of LNG carriers in the world will provide Qatar with a huge competitive advantage in the spot and short-term markets. For instance, the LNG market was traditionally dominated by long-term contracts covering 20-25 years. However, thanks to the emergence of new suppliers and consumers, spot market purchases of LNG have also become a common practice. Indeed, spot and short-term LNG trades made up 32 percent of overall import volumes in 2018 (EnergyWorld, 2019) and are expected to rise over the coming years.

To sum up, by expanding its LNG shipping capabilities on top of its well-established production and liquefaction facilities, Qatar is building a holistic, efficient and resilient LNG supply chain. This will provide the country with a unique and significant competitive advantage in a highly competitive LNG business landscape.

__________________________________________________________________

Dr. Adel Elomri and Dr. Brenno Menezes are Assistant Professors at the College of Science and Engineering, Hamad Bin Khalifa University.

       

This article is submitted on behalf of the author by the HBKU Communications Directorate. The views expressed are the author’s own and do not necessarily reflect the University’s official stance.

Japan Partners in Major US ‘Energy Center’ Project

Silver Spring, MD – Energy provider Competitive Power Ventures of Maryland (CPV) is partnering with Japan’s Marubeni and Toyota Tsusho on a new $775 million “energy center” in Waldorf, Maryland, about 25 miles southeast of Washington, D.C.

A combined-cycle natural gas-fired electric power generating facility, the plant will generate 725-megawatt (MW) of electricity and sell its capacity, energy and ancillary services to power as many as 700,000 homes.

The project is Marubeni’s first in the region overseen by PJM Interconnection, the regional transmission organization that coordinates the movement of wholesale electricity in all or parts of 13 states and the District of Columbia – an area that includes more than 51 million people.

The new project “is a valuable addition to our portfolio. We remain committed to further expanding our footprint and capabilities in the North American electric power sector,” said Toshi Fukumura, President and CEO of New York-based Marubeni Power International Inc.

No stranger to the North American energy sector, in 2010, Toyota Tsusho acquired a 45 percent interest in the Oyster Creek natural gas fired cogeneration plant in Freeport, Texas. Since then, has increased its stakeholdings in two major natural gas-generated power plants in Canada.

Earlier this year, CPV received the ‘green light’ from the Maryland Public Service Commission to go-ahead with the construction of a long-planned, 661-megawatt natural gas plant, also to be sited in Waldorf.

The $500 million facility is expected to be online by June 2015. Once that plant is online, more than 9 percent of the state’s energy generation will come from natural gas facilities, according to the governor’s statement.

12/17/2014