Kuala Lumpur, MALAYSIA–A poll of delegates at the World Gas Conference indicated that industry professionals are confident Asia is well-placed to support continuing growth in gas consumption through the provision of the infrastructure it needs. A total of 71% of participants thought that the region has the technical foundation to develop the systems needed to support an increased dependence on gas, while 29% of participants felt that it does not.
The Industry Snapshot Poll was conducted by global independent technical advisor GL Noble Denton. The poll was also completed online by senior professionals from across the industry.
According to the latest figures published by the Worldwatch Institute, Asia/Pacific experienced the world’s strongest increase in gas utilization in 2009, with China, India, South Korea, and Taiwan all experiencing demand growth of over 20%. China led the region’s growth spurt by consuming 3.9 Tcf or 3.4% of world usage.
GL Noble Denton’s Executive Vice President for Asia Pacific, Richard Bailey said: “In the past five years, the use of natural gas has increased dramatically in Asia and recent projections suggest that, in China alone, this could increase five-fold within two decades.
“The result of this poll reveals that oil and gas professionals are confident in the region’s ability to develop the infrastructure needed to support its growing demand for gas and to deliver an increasing supply as dependence on gas increases.”
Delegates were also asked whether Japan can decrease its dependence on LNG in the next decade and whether China will become the world’s largest producer of shale gas by 2030.
–67% of participants said LNG is likely to continue to make up for a shortfall in nuclear power production in Japan for the next 10 years.
–81% of respondents said China will be world’s largest shale-gas producer by 2030, while 19% thought that it will not.
“The Chinese Ministry of Land and Resources has estimated that the country may have 25 trillion cubic meters of potentially recoverable shale gas. The impact of those reserves could be even greater than in North America, which has turned from a gas importer to a potential exporter in less than a decade,” Bailey said.
“Just a year ago, Asian unconventional gas projects were widely considered to be in their infancy, albeit with a promising outlook. The result of this poll highlights the optimism for unconventional gas production in the region. It reflects the belief of some players in the industry that China’s shale gas resources could radically alter the dynamics of supply for the world’s biggest energy consumer, just as shale gas is changing the situation in the United States.”
Global Vision For Gas
In a special report produced by the International Gas Union, the future of pipelines and storage was described as “out of sight.”
In addition to the oft-discussed environmental advantages of natural gas as lower emitter of carbon dioxide, the report suggests another reason why pipelines should get preferential treatment from infrastructure planners.
“Gas has a relatively low geographical footprint of underground pipelines once they are in place. Underground pipelines are often easier to permit than overhead power cables, for example. As the issue of siting becomes more difficult and protracted in developed economies, this advantage will likely grow.
“Pipelines have very long life spans and then to have financial depreciation profiles of between 40 to 60 years. With proper pipeline integrity programs, they can continue to operate beyond their financial accounting lives. Over time the natural gas industry will reduce its environmental footprint event further, for example through more efficient compressors and lower levels of loss. The carbon content of this gas can also be reduced by the partial blending of hydrogen, although within reasonably narrow tolerance levels.”
The report suggests that pipelines can play an even bigger role in the future, depending on the direction of technological and policy advance in the longer term.
“In a scenario of extended renewable energy supply, gas pipelines can be used to store surplus power generation, known as ‘gas to power’. Wind or solar power generated at times of surplus power supply can, through a process of methanation and electrolysis, be stored within the transmission pipeline and wider gas storage system, and then used to help meet peak demand.
“This might make economic sense at times when renewable power would otherwise need to be curtailed because of surplus supply on the grid or lack of sufficient power network associations.”
A trial for the storage of renewable power within the gas system has been proposed in Germany, according to the report. This project has two potential benefits. First, it helps to resolve the problem of intermittent renewable generation by providing back-up or storage within the pipeline network. Back-up is provided by renewable gas itself. Second, it increases the productive utilization rates of renewable power and might reduce unit costs.
“if carbon capture and sequestration (CCS) is to play a major role in future energy provision, gas pipelines could transition to carriers of CO-2, with suitable adjustments. The pipelines lead directly back to depleted reservoirs that can be used to store the very carbon they originally housed- grand form of recycling.”
“Finally, if hopes of a hydrogen economy materialize, then the gas pipeline system would become the natural delivery system for hydrogen.”
Regarding gas storage, the report looks at the role of LNG and how these assets are another “key enabler toward a sustainable energy future.”
“Gas storage can either be natural underground formations, notably aquifers, salt caverns and depleted oil and gas fields or LNG tankage. LNG storage provides particularly high response flexible supply. Gas storage is critical, not least given that electric power cannot be stored, and provides two fundamental services. First, it helps meet demand fluctuations for natural gas both seasonal and daily. Second, storage helps provide the back-up fuel for intermittent power generation.
The report also urges policymakers to consider the following issues.
“On the supply side, measures are needed to allow the responsible development of unconventional gas internationally so that it can supplement conventional gas supply. In parts of the developing world the removal of subsidies that set gas prices below the cost of production and supply, where possible, could provide a powerful investment impetus to help develop more gas to the overall benefit of the economy and inhabitants. Biogas needs to be facilitated to supply a third pillar of global gas supply whose importance will need to grow substantially post 2030.
“Infrastructure is essential for the provision and delivery of natural gas to consumers. In many developing markets, infrastructure is needed if natural gas is to become a core part of the energy balance. It is the complexity of arranging an integrated approach between developing supply, building infrastructure and creating demand that often stymies natural gas developments and leads to use of more costly alternatives. Appropriate financing and regulatory incentives for infrastructure will be essential.
“Finally, if the objective to reduce GHG emissions is to be achieved, it will be essential that the cost if carbon is included in the provision of energy. This principle is key; the mechanism of whether to adopt a market-based cap-and-trade approach or some form of taxation is a secondary issue where different regions may favour different solutions. Adoption of carbon taxing would allow industry or the market to decide the optimal or lowest costs of abatement, without requiring policymakers to pick favoured technologies or fuels. We believe natural gas – based on its costs and low carbon content – would fare well under a neutral carbon scheme; but ultimately the market will determine outcomes based on evolving competitive costs.”