Natural Gas

Natural Gas

According to the Energy Information Agency of the United States Department of Energy, almost 30 percent of the world’s total delivered energy is used for transportation, the vast majority of which is in the form of crude oil-derived liquid fuels, such as gasoline and diesel.  Concerns regarding the sustainability of crude oil, coupled with the tremendous reserves of natural and the potential volumes of biomethane (also known as “renewable natural gas”) have fueled an intensive interest in technology that can produce transportation fuels and commodity chemicals from natural gas

Studies by both the Energy Information Agency of the United States Department of Energy (EIA) and the International Energy Agency (IEA), have reported that the worldwide, proved reserves of natural gas in 2008 were approximately 6300 trillion cubic feet (tcf).    Put into perspective, 6300 tcf of natural gas is almost equal in energy content to the world’s proved reserves of crude oil and represents over 60 years of demand at current usage rates. Vast as these proved reserves may seem, far more gas exists.  As reported in the 2009 World Energy Outlook2 (an annual publication of the IEA):

“The long-term global recoverable gas resource base is estimated at more than 850 trillion cubic meters [over 30,000 tcf] (including only those categories of resource with currently demonstrated commercial production). Unconventional gas resources — mainly coalbed methane, tight gas (from low-permeability reservoirs) and shale gas — make up about 45% of this total. To date, only 66 tcm of gas has been produced (or flared)”.

Of particular interest is the increasing contribution that “unconventional gas” such as shale gas, has made to the proved reserves.   Little regarded just over 10 years ago, the effect of the increasing ability to recover natural gas from shale basins (often referred to as “plays”), particularly in the United States, is hard to overstate.

Consider that through 1993, proved reserves of natural gas had been in decline, dropping from a peak of 293 tcf in 1967 to just 162 tcf in 1993 and remaining essential level through 1999.  Since 2000 however, proved natural gas reserves have grown steadily each year, culminating at 245 tcf in 2008, the last year for which the EIA has released data. Since 2008 however, the growth of shale gas exploration and development has actually accelerated and the proved reserves for 2010 are expected to be at an all time high.

Many of the shale gas plays are located in areas far removed from the U.S. Gulf Coast, and thus moving shale gas to market will require significant investments in gas processing facilities and pipelines.