Natural Gas

Michael J. Bradshaw, Tim Boersma

• Publisher: Polity
• Year: 2020
• Print ISBN: 9780745659985, 9780745659978
• eBook ISBN: 9781509542857
• Edition: 1
• Topic: Physical Sciences
• Subtopic: Geography
• Index: Geography

Is natural gas the 'bridge' to our low-carbon future?In power generation, industrial processes, parts of the transportation sector, and for domestic use, natural gas still has the potential to play a greater role in various energy transition pathways around the world.But such a future is by no means certain.

In this book, Michael Bradshaw and Tim Boersma offer a sober and balanced assessment of the place of natural gas in the global energy mix today, and the uncertainties that cloud our understanding of what that role may look like in the future.They argue that natural gas has become prominent in recent decades, spurred by two revolutions: the first has been the rise of unconventional natural gas production, and the second the coming of age of the market for liquefied natural gas (LNG). However, a third revolution is required to secure natural gas' long-term role in various energy transition pathways, as countries are increasingly pushing to address air quality concerns and curtail greenhouse gas emissions. This revolution has to take place as politicians, citizens, investors and shareholders are becoming increasingly vocal about the need to improve the environmental footprint of the fuel, while simultaneously, and perhaps paradoxically, demand for it continues to grow, in a world where geopolitical challenges seem to be mounting.

CHAPTER ONE
Natural Gas Fundamentals

For most private and state-owned energy companies, natural gas is considered an affordable, accessible and acceptable route to a future low-carbon energy system. For most environmental groups, it is just another fossil fuel and, as such, is part of the problem, rather than the solution. A recent NGO (non-governmental organization) report maintains that gas is not clean, cheap or necessary.¹ A parallel narrative argues that the billions of dollars being invested in new natural gas production and infrastructure, that will take decades to pay off, could end up as stranded assets in a future world of significantly constrained GHG emissions. Between these opposing views lies the position that natural gas may in many, but not all, parts of the world provide a bridge to a future low-carbon energy system and, depending on technology and policy, may play a role thereafter.² This is why mainstream energy forecasts see natural gas as the only fossil fuel that will enjoy sustained growth in demand through the first half of this century.

Our belief is that the scale and pace of global gas demand growth will be determined by the complex interplay of economics, geography and (geo)politics within the wider context of energy and environmental (including climate change) policy. As explained in the introduction, we posit that the natural gas industry has been undergoing two revolutions in recent years, which have contributed to the swift rise of natural gas as a fuel and feedstock in most parts of the world. However, a third revolution is required for natural gas to cement its long-term role, as governments and business seek to curtail GHG emissions and limit environmental pollution in the decades ahead. This determination results in what we call a ‘geopolitical economy approach’ to analysing the global gas industry, the details of which are discussed at the end of this chapter. But before we can discuss the approach and content of this book in any detail, we start with the fundamentals of natural gas.

The what, how and where of natural gas

It is commonplace for geopolitical analysis to lump oil and gas together as if they were the same thing, but it is important to understand the material specificity of natural gas as this explains in large part why the geopolitics of natural gas are different and distinct from those of oil.³ This section asks four questions about the materiality of natural gas that have significance for our analysis: what is natural gas, how does it occur, how is it measured and where is it found? In a recent study, Peter Evans and Michael Farina identified three eras of gas: the first was the era of ‘manufactured gas’ (or ‘town gas’) from 1810 to around 1920, when gas was produced primarily from coal; the second was the era of ‘conventional gas’ from 1920 to around 2000; and the third era of ‘unconventional gas’ is still unfolding.⁴ However, we would emphasize that the age of conventional gas is far from over and what we are witnessing is the global expansion of the natural gas industry based on proven reserves and new discoveries of conventional gas and the promise of more geographically dispersed unconventional gas. In addition, there is a widely held, though contested, belief that natural gas will continue to play a role in a low carbon economy as well. This book focuses on developments since the 1920s and does not consider the era of manufactured gas.

What Is Natural Gas?

Natural gas terminology can be confusing, because definitions are often absent. The main component of natural gas is methane (CH₄), which tells us the chemical composition: one carbon element (C) and four hydrogen elements (H). If the percentage of methane in natural gas is very high (>95 per cent) it is called ‘dry gas’. It will require little effort to process the natural gas once brought to the surface (more on this later) and is relatively easy to use. More often, the share of methane is more modest, and methane is found together with heavier molecules – in the industry lexicon, this is often lumped together as ‘natural gas liquids’ (NGLs). This is also referred to as ‘wet gas’. These NGLs include ethane (C₂H₆), propane (C₃H₈) and butane (C₄H₁₀). When pressurized in containers, the latter two liquids are often referred to as liquefied petroleum gas (LPG). Whether a natural gas field produces ‘wet’ or ‘dry’ gas is an important commercial consideration as the NGLs are valuable in their own right. In fact, depending on market conditions, NGLs are regularly the main commercial incentive for producers to invest, with natural gas becoming an associated product that can be sold at a very competitive price. This is logical when considering that NGLs have a higher energy content and therefore typically have a higher value than methane.

Natural gas often also contains non-hydrocarbon elements. The most common ones are carbon dioxide, hydrogen sulphide, hydrogen and helium. Other impurities that may be present are water, sulphur species, mercury, naturally occurring radioactive materials and oxygen.⁵ These elements are removed during processing. If they are encountered in too large quantities, it can be too costly to produce the natural gas (in which case the resource is left in the ground). Natural gas with a high hydrogen sulphide content, for example, is called ‘sour gas’, and is sometimes left where it is.⁶

The composition of natural gas determines the amount of energy it contains, which is released when the gas is completely burned. Most natural gas that is found around the world has a high heating value, or high calorific value. Natural gas meeting a certain bandwidth of specifications can therefore be used in appliances interchangeably. Variations in quality of up to 5 per cent typically do not affect usage of the natural gas in appliances. The Wobbe index is an indicator of the interchangeability of fuel gases such as natural gas, LPG and town gas. In rare instances, natural gas has a low calorific value. The giant Slochteren field in the Netherlands, discovered in 1959 and producing to date, is the best example. Because the natural gas from this field is of a different quality, burners in household and many industrial appliances have been aligned with this natural gas (known as L-Gas because of its lower calorific value). Other natural gas found in the Netherlands – for instance from smaller fields in the North Sea – and imported natural gas – e.g., from Norway, Russia, or in the form of LNG – tends to be of high calorific value (known as H-Gas). In order to be able to use this natural gas, the transmission system operator GTS (Gasunie Transport Services BV) operates a nitrogen plant. By mingling high-calorific gas with nitrogen, it can be inserted into the Dutch distribution grid, and used in household appliances. Major industrial consumers in the Netherlands are generally not connected to the low-calorific gas grid. As discussed in more detail in chapter 2, the phasing out of natural gas production in the Netherlands has major consequences for Dutch consumers, and those in Northern Germany, Belgium and Northern France (who also use lowcalorific Slochteren gas). Their appliances need to be adjusted at the household level, in order to prepare for H-Gas, once production in the Netherlands ceases entirely, sometime in the early 2020s.

Once natural gas has been brought to the surface, it needs to be treated in order to have roughly similar specifications flowing through pipelines. For dry gas, impurities must be removed to get the natural gas at a quality level that allows transportation to markets and/or end users. For wet gas, NGLs are generally removed in order to sell those in their own markets. Treatment of natural gas takes place in a processing plant, sometimes described as a giant refrigerator.⁷ When a stream of gas is cooled, NGLs condense into a liquid, allowing for separation and further treatment. The process to separate NGLs into ethane, propane and so on is called fractionation, and occurs in a separate processing plant. Once separation has taken place, natural gas can be injected into high-pressure transmission lines for transport to markets. Once closer to end users – industries and households – natural gas is transported in low-pressure distribution grids at the local level. Some large consumers, e.g. electricity or industrial plants, take natural gas directly from the transmission pipeline. Of course, in many parts of the world, infrastructure to transport natural gas to market has not been developed sufficiently, if at all. Demand can be scattered, making pipelines uneconomic to build, and in many developing countries the risks of making capital-intensive investments against the backdrop of uncertainties related to economic development or governance are just too large. Absent transport by pipelines, natural gas can be cooled until it becomes a liquid – so-called liquefied natural gas (LNG) – and transported by ship (and even by container and truck) to reach end users. As described in detail in chapter 4, the market for LNG has been around since the 1960s, but is currently undergoing fundamental change and is growing rapidly.

When combusted (burned), natural gas releases carbon dioxide (CO₂), the largest contributor to anthropogenic climate change. If released into the atmosphere without combustion, CH₄ has a different, but also very significant, impact on the earth’s climate. In its Fifth Assessment Report, the Inter-Governmental Panel on Climate Change (IPCC) upgraded the global warming effects of methane to 34 times stronger than CO₂ over a 100-year period, up from 25 times in their previous report in 2008.⁸ Over a 20-year period...

Table of contents

• Cover
• Front Matter
• Abbreviations
• Natural gas (NG) and LNG conversion table
• Introduction
• 1 Natural Gas Fundamentals
• 2 Pipeline Geopolitics
• 3 The Shale Gas Revolution
• 4 The Coming of Age of LNG
• 5 The Future Role of Natural Gas
• 6 The Golden Age of Gas?
• Postscript
• Selected readings
• Index
• End User License Agreement