Illustration by Robert Pizzo
The last time the International Gas Union’s World Gas Conference met in the United States was in 1988. At the time, the world had only recently emerged from the global energy crisis of the 1970s that had been spurred by political conflicts in the Middle East.
Domestically, many states had experienced natural gas shortages and mandatory curtailments. In response, Congress moved toward deregulation with the 1978 Natural Gas Policy Act. Deregulation accelerated under the administration of President Ronald Reagan—the 1988 conference’s keynote speaker.
Since then, the role of natural gas has changed dramatically, both domestically and internationally. The United States is a world leader in natural gas production, and gas is affordable and abundant throughout the nation. Liquefied natural gas shipping, since its early stages in 1988, has increased supplies and lowered prices across the globe. International customers have more options and greater flexibility.
Technology, environmental factors and changing political alliances have created new opportunities for natural gas. They have also contributed to some tough challenges. But as industry leaders prepare for this year’s World Gas Conference, once again to be held in Washington, D.C., the event marks the culmination of the USA IGU presidency under the theme “Fueling the Future.” And most experts agree: Natural gas is increasingly important to meeting the world’s energy needs.
“The potential of natural gas is only beginning to be realized, and expectations are high for the role it will play in the coming years.”
J.M. “Joe” Kang, incoming president for 2018–2021, International Gas Union
J.M. “Joe” Kang, IGU’s incoming president, offers an optimistic vision of the future of natural gas: “The 2018 to 2040 energy forecast indicates the gas share in the global energy mix will increase on average by 1.3 to 1.6 percent yearly at a time when global energy demand will increase at a relatively mild 1 percent a year.”
Looking at recent International Energy Agency research, Kang said, “Natural gas growth is based on the fuel being cleaner, more affordable and more versatile than other fossil fuels. Its application is consistent with the call for a transition to low-carbon energy.”
Former IEA Executive Director Nobuo Tanaka said natural gas is the fuel Asian nations need to meet a variety of urgent goals. China and India must move to natural gas to combat life-threatening air pollution. Emerging economies, including Malaysia and Brunei, want affordable natural gas to support domestic growth.
“The potential of natural gas is only beginning to be realized, and expectations are high for the role it will play in the coming years,” Kang said.
The environment is one area where that potential is growing. The World Health Organization estimates that air pollution causes 3.7 million premature deaths a year. Particulates, sulfur oxides, nitrogen oxides and carbon dioxide from coal and heavy oils threaten lives daily in cities across the globe. Health effects range from asthma to congestive heart failure and from nerve damage and cognitive impairment to stroke.
Air-quality concerns are challenging coal’s historic dominance for home heating and cooking in emerging nations, as well as for electric generation worldwide. Experts agree that natural gas—which, when combusted, emits no particulates or sulfur oxides and less than 25 percent of the nitrogen oxides released by coal—is the natural replacement.
An IGU study offers this valuable example from Urumqi, a major population center in Northwest China. A variety of factors contributed to Urumqi residents suffering some of the worst air quality in a nation already noted for smog-choked urban areas. A primary pollution source was household coal use.
In 2012, the government pursued an aggressive plan to bring natural gas to buildings throughout the city. In its first six months, the program created a natural gas system and replaced nearly 13,000 coal boilers with gas equipment. Two years later, particulate concentrations had dropped by more than 75 percent, and there was a 50 percent reduction in sulfur oxides. Most importantly, the region has reported a 73 percent drop in pollution-related lung cancer.
As the dangers of nitrogen oxides are becoming more apparent, natural gas, long known as a clean, inexpensive vehicle fuel, is also coming into its own in transportation use. According to the latest data, nearly 24 million natural gas vehicles—including everything from motorcycles and buses to locomotives, ferries and aircraft—are in operation worldwide.
Innovative manufacturers are now creating vehicles with the power and storage capacity to make low-emission natural gas practical for both long-distance and return-to-fleet vehicles.
NOx emissions from the Cummins Westport Ultra-Low NOx engines, for example, are 90 percent lower than the U.S. Environmental Protection Agency’s current standards. The engines burn cleaner than the latest available diesel engines and even beat out electric motors when the full fuel cycle is considered.
Natural gas costs are also competitive and stable, and these vehicles are noted for their low maintenance costs. Furthermore, the vehicles help operators comply with air quality regulations.
As the world unites to reduce greenhouse gases, the natural gas industry is also stepping up to support renewable power and further reduce emissions from its own product.
In addition to other air quality benefits, natural gas produces about half the greenhouse gas emissions of coal when used to produce power. Coby van der Linde, a world-renowned energy economist from the Clingendael Institute in the Netherlands, said natural gas is essential for other reasons as the world transitions to more renewable power.
Recently in Europe, van der Linde said, “Power represents about 20 percent of all energy use. If this share increases, infrastructure and storage must be able to handle the short and seasonal imbalances in demand and supply. If renewable energy cannot fully support the needs of the electric grid, the gap must be closed by more gas-fired power generation.”
Electricity providers are now designing natural gas generation to work in concert with renewables. For example, Oregon’s largest electric utility, Portland General Electric, opened its Port Westward plant in 2014. The company says that the plant can “ramp up to full load in less than 10 minutes, allowing it to compensate for wind and solar volatility, and complements the new 267-MW Tucannon River Wind Farm.”
At 75 percent efficiency, combined heat and power is also an excellent distributed generation system and offers exciting potential as a partner for on-site renewables. In a New York Whole Foods Market, a gas engine generates a portion of the store’s electricity. A 324-kilowatt solar array in the parking lot offsets more than 380,000 kW hours of the remaining power supplied by the grid. Waste heat from the gas engine warms occupied spaces and also heats and chills water.
In further efforts to reduce the impact on climate, the IEA’s Tanaka said the industry is developing technology that will make natural gas competitive with electric sources in both cost and sustainability. Norwegian gas developer Statoil has been capturing and storing carbon dioxide—a process called CCS—at two natural gas fields. Gas processed using this technique is not subject to a carbon tax, so it can be priced competitively despite the high CCS costs.
Meanwhile, Japanese companies are developing methods to remove carbon dioxide from natural gas, transporting and storing clean hydrogen for power production.
Renewable natural gas is another exciting development in the effort to reduce greenhouse gas emissions. Capturing methane from landfills, livestock operations and wastewater treatment facilities keeps a potent greenhouse gas out of the atmosphere. When the collected gas replaces other fossil fuels, this renewable source does double duty to protect the climate.
RNG also can be used to generate power or to fuel vehicles, and utilities are adding it to the natural gas in their pipeline systems. The natural gas industry is teaming up with public and other private entities to make this product increasingly available.
The shale revolution precipitated a “golden age of gas”—with abundant supplies lowering natural gas costs in a way unimagined just a few years earlier.
That abundance is fueling natural gas as an environmental solution, and is also assuring its strong role in the energy mix of countries across the globe. Tanaka said new LNG facilities and routes will make low-cost gas available to vast new regions of the globe. The IEA predicts LNG imports will represent about 60 percent of natural gas consumption by 2040, up from a current figure of 39 percent. Meanwhile, Daniel Yergin, a Pulitzer Prize-winning author and energy thought leader, said, “Global growth will be particularly noticeable for LNG transport, which we expect to increase at 4 percent a year.”
Abundant production makes natural gas exporting attractive to countries including the United States, Canada, Australia and Russia. Expect to see new export terminals across the globe, say the experts. Furthermore, Tanaka points out, more tanker passages are now moving across the Arctic Ocean. The new route sets the stage for LNG exports out of Russia’s Yamal Peninsula, said to have the biggest gas reserves on earth.
Kang adds that new technology is making LNG movement more practical and less expensive, and emerging nations that can’t invest in infrastructure might be the beneficiaries. One such advance is the floating LNG facility. Vessels stationed above offshore gas fields can process, liquefy and store LNG on-site before transferring the liquid fuel to a transport tanker. Meanwhile, floating storage regasification units are reducing the need for expensive onshore infrastructure. New vessels are now being built with gasification capacity, while older tankers can be retrofitted for this purpose.
From a political perspective, Yergin sees several positive outcomes to the growth of LNG. First, he referred to Russia’s long-standing ability to leverage international dependence on Russian fuels as a way to achieve its nationalist goals.
“The big growth in global LNG supplies, including the coming surge from the United States, actually serves to reduce the political issues around gas from Russia by providing other nations with diversified options,” he said. “[And] the growth of LNG shipments from the United States to China is a positive contribution to the complex relationship between these two countries.”
Kang said that energy access is only one of the critical issues the world faces as the population grows and the climate changes: “Others include potable water, food scarcity and extreme poverty.”
Energy is inextricably connected to these other critical issues, and there are many ways that natural gas can contribute to a nation’s goals of clean air, a healthy environment and a robust economy.
As nations are looking to create dynamic economies with minimum carbon emissions, the conclusion is that natural gas is the answer. It’s clean, affordable—and a job-builder.
Nations with production potential have tremendous job development potential. In addition to well-paying jobs in the gas industry, every gas sector job leverages three or more jobs in other parts of the economy, according to a study by the American Petroleum Institute conducted by PwC.
When natural gas prices are low, as they will be for many years, everyone benefits. And it’s not just because of lower energy costs: Natural gas is a feedstock in products ranging from medical gases to fertilizers. It’s the only affordable fuel for the production of many plastics. It’s essential to making cement mixes—literally the foundation of modern communities.
Increased LNG availability means that remote areas can benefit from natural gas. Small-scale LNG can arrive by truck and be stored close to end users. The gas can fuel high-efficiency engines, creating on-site power.
These technologies offer households an alternative to firewood and charcoal—major sources of local air pollution—and can provide reliable power for home and business uses.
“One of the most intractable challenges facing governments is the development of energy policies that spur economic growth and provide reliable and affordable energy and environmental protection,” said Kang. “To that end, nations must establish tailor-designed implementation strategies for energy mixes that address their specific needs.”
Natural gas will increasingly play an important role in that mix worldwide.
As the International Gas Union brings energy leaders from around the world to the United States and Washington, D.C., during the 27th World Gas Conference, June 25–29, another major event is also taking place.
WGC 2018 coincides with the 100th anniversary of the American Gas Association, which was formed in June 1918. AGA was the U.S. charter member of the International Gas Union, which came together in 1931. Even before the IGU, the association’s role was to represent the entire American natural gas industry value chain—upstream to downstream. As a result, AGA has been a strong advocate for the international growth of natural gas.
The 2018 conference marks the third time AGA has hosted the event, with the first in New York City in 1955 and the second in Washington, D.C., in 1988, with keynote speaker President Ronald Reagan.