4.3.1.2 Gaseous fuels

Conventional natural gas

Natural gas production has been increasing in the Middle East and Asia–Oceania regions since the 1980s. Globally, from 1994–2004, it showed an annual growth rate of 2.3%. During 2005, 11% of natural gas was produced in the Middle East, while Europe and Eurasia produced 38%, and North America 27% (BP, 2006). Natural gas presently accounts for 21% of global consumption of modern energy at around 100 EJ/yr, contributing around 5.5 GtCO₂ annually to the atmosphere.

Proven global reserves of natural gas are estimated to be 6500 EJ (BP, 2006; WEC, 2004c; USGS, 2004b). Almost three quarters are located in the Middle East, and the transitional economies of the FSU and Eastern Europe. Russia, Iran and Qatar together account for about 56% of gas reserves, whereas the remaining reserves are more evenly distributed on a regional basis including North Africa (BP, 2006). Probable reserves and possible undiscovered resources that expect to be added over the next 25 years account for 2500 EJ and 4500 EJ respectively (USGS, 2004a), although other estimates are less optimistic.

Natural gas-fired power generation has grown rapidly since the 1980s because it is relatively superior to other fossil-fuel technologies in terms of investment costs, fuel efficiency, operating flexibility, rapid deployment and environmental benefits, especially when fuel costs were relatively low. Combined cycle, gas turbine (CCGT) plants produce less CO₂ per unit energy output than coal or oil technologies because of the higher hydrogen-carbon ratio of methane and the relatively high thermal efficiency of the technology. A large number of CCGT plants currently being planned, built, or operating are in the 100–500 MW_e size range. Advanced gas turbines currently under development, such as so-called ‘H’ designs, may have efficiencies approaching 60% using high combustion temperatures, steam-cooled turbine blades and more complex steam cycles.

Despite rising prices, natural gas is forecast to continue to be the fastest-growing primary fossil fuel energy source worldwide (IEA, 2006b), maintaining average growth of 2.0% annually and rising to 161 EJ consumption in 2025. The industrial sector is projected to account for nearly 23% of global natural gas demand in 2030, with a similar amount used to supply new and replacement electric power generation. The share of natural gas used to generate electricity worldwide is projected to increase from 25% of primary energy in 2004 to 31% in 2030 (IEA, 2006b).

LNG

Meeting future increases in global natural gas demand for direct use by the industrial and commercial sectors as well as for power generation will require development and scale-up of liquefied natural gas (LNG) as an energy carrier. LNG transportation already accounts for 26% of total international natural gas trade in 2002, or about 6% of world natural gas consumption and is expected to increase substantially.

The Pacific Basin is the largest LNG-producing region in the world, supplying around 50% of all global exports in 2002 (US EIA, 2005). The share of total US natural gas consumption met by net imports of LNG is expected to grow from about 1% in 2002 to 15% (4.5 EJ) in 2015 and to over 20% (6.8 EJ) in 2025. Losses during the LNG liquefaction process are estimated to be 7 to 13% of the energy content of the withdrawn natural gas being larger than the typical loss of pipeline transportation over 2000 km.

LPG

Liquefied petroleum gas (LPG) is a mixture of propane, butane, and other hydrocarbons produced as a by-product of natural gas processing and crude oil refining. Total global consumption of LPG amounted to over 10 EJ in 2004 (MCH/WLPGA, 2005), equivalent to 10% of global natural gas consumption (Venn, 2005). Growth is likely to be modest with current share maintained.

Unconventional natural gas

Methane stored in a variety of geologically complex, unconventional reservoirs, such as tight gas sands, fractured shales, coal beds and hydrates, is more abundant than conventional gas (Table 4.2). Development and distribution of these unconventional gas resources remain limited worldwide, but there is growing interest in selected tight gas sands and coal-bed methane (CBM). Probable CBM resources in the US alone are estimated to be almost 800 EJ but less than 110 EJ is believed to be economically recoverable (USGS, 2004b) unless gas prices rise significantly. Worldwide resources may be larger than 8000 EJ, but a scarcity of basic information on the gas content of coal resources makes this number highly speculative.

Large quantities of tight gas are known to exist in geologically complex formations with low permeability, particularly in the US, where most exploration and production has been undertaken. However, only a small percentage is economically viable with existing technology and current US annual production has stabilized between 2.7 and 3.8 EJ.

Methane gas hydrates occur naturally in abundance worldwide and are stable as deep marine sediments on the ocean floor at depths greater than 300m and in polar permafrost regions at shallower depths. The amount of carbon bound in hydrates is not well understood, but is estimated to be twice as large as in all other known fossil fuels (USGS, 2004a). Hydrates may provide an enormous resource with estimates varying from 60,000 EJ (USGS, 2004a) to 800,000 EJ (Encyclopedia of Energy, 2004). Recovering the methane is difficult, however, and represents a significant environmental problem if unintentionally released to the atmosphere during extraction. Safe and economic extraction technologies are yet to be developed (USGS, 2004a). Hydrates also contain high levels of CO₂ that may have to be captured to produce pipeline-quality gas (Encyclopedia of Energy, 2004).

The GTL process is gaining renewed interest due to higher oil prices, particularly for developing uneconomic natural gas reserves such as those associated with oil extraction at isolated gas fields which lie far from markets. As for CTL, the natural gas is turned into synthesis gas, which is converted by the Fischer-Tropsch process to synthetic fuels. At present, at least nine commercial GTL projects are progressing through various development stages in gas-rich countries such as Qatar, Iran, Russia, Nigeria, Australia, Malaysia and Algeria with worldwide production estimated at 0.58 Mbbl/day (FACTS, 2005). GTL conversion technologies are around 55% efficient and can help bring some of the estimated 6000 EJ of stranded gas resources to market. Production costs vary depending on gas prices, but where stranded gas is available at 0.5 US$/GJ production costs are around 30 US$ a barrel (IEA 2006a). Higher CO₂ emissions per unit consumed compared with conventional oil products.