Abstract
The World, headed by North America, is shifting its energy focus towards natural gas for power generation as a substitute for coal and oil. Nuclear, which could be the obvious recourse, at least for now, seems to be losing to natural gas. Eventually, the "holy grail" of natural gas use must be its major contribution as a transportation fuel, not necessarily directly as compressed natural gas for engine combustion but indirectly, providing the necessary electricity in electrified transportation.
One of the clear advantages is that natural gas burns more cleanly and efficiently than other fossil fuels. Worldwide supplies are plentiful and diverse but with an imposing presence of Russia which houses the lion's share in proven reserves. Transportation has always been the issue and once recent major activities come to fruition (such as liquid natural gas, LNG) prices will be kept reasonable for decades. In the past few years, countries with traditionally modest gas reserves suddenly started declaring huge proven reserves to attract private investment. With the uncertainty associated with some of these claims it has become worthwhile to review all natural gas sources and the factors that will affect the supply, price and developments for the next 20 years. During the autumn and Winter of 2005-2006, the price of natural gas was driven to an unprecedented high (over $16/MMBtu) and had it not been for uncharacteristically mild winter in the United States the price would have escalated even higher. Emerging or speculated consumption by China and India, the always large U.S. energy appetite, along with maturing U.S. domestic production are the primary reasons for this predicament. The four-year run-up in natural gas prices is actually normal behavior for an economic or energy transitional period. However, serious energy-shortages loom on the horizon impacting more than just the price of a single commodity. Regulatory policies, ‘concerned’ environmental groups, and industrial inaction create choke points in the supply chain. Such manmade barriers, no matter how well intentioned, will needlessly generate energy woes and hardship for millions of consumers in the near future.
However, we are very bullish on natural gas and predict that it will emerge as the premier fuel for the world economy and we believe that supply, transportation and utilization challenges will be overcome by the industry and the consuming world.
