New Gas Markets | Russell T. Rudy Energy LLC
As a result of the shale revolution, the U. S. is blessed with extensive, easily producible, natural gas reserves. This abundance, and proximity to markets, has enabled producers to react quickly to any surges in demand without prices spiking. However, producers, transporters and utilities are trying to further monetize these reserves by developing new markets, both domestically and overseas (primarily through Liquefied Natural Gas, or LNG, exports). A primary vehicle for developing these markets is the American Gas Association (AGA). A recent article in “Rigzone” featured comments by the AGA president and CEO, Dave McCurdy, and other leaders in this effort.
According to the U. S. Energy Information Agency, natural gas is increasingly being used for domestic electricity generation. Given its availability, low and stable price, and environmental advantages, this is understandable. However, industry advocates see the potential for further, unconventional, uses of natural gas for power generation, especially through combined heat and power (also known as CHP, or cogeneration) projects. These involve off grid generation of electricity and provide the opportunity for users to generate their own power, sell excess back to the grid, and concurrently utilize the heat produced in the process for other industrial applications.
Currently, about 8% of total domestic power generation is via CHP with projects operating in all 50 states. Gas-fired microturbines, some as small as a refrigerator, have enabled these applications to expand. They are especially popular with refineries where the produced heat can be used for reheating storage tanks or pre-heating boiler feed water.
Industry advocates see an expanded use of microturbines for areas where electricity is not available through a grid, or as a back-up source for multi-unit residential buildings, hospitals, hotels, manufacturing facilities, or data centers which are especially vulnerable to power disruptions.
Internationally, there are also opportunities for expanded use of natural gas, primarily through LNG. “Hub and spoke” projects which involve trunk lines to major population centers with spur lines to outlying users are underway. Another interesting approach is the use of “milk-run” deliveries of LNG to remote areas via ships and barges. Such a system has been used in Norway for decades. There, communities dot its rugged shoreline and marine vessels make regularly schedule deliveries of LNG. This approach looks especially appealing to countries like the Philippines and Indonesia, where large populations live on hundreds of Islands.
Ultimately, it is a question of economics. How delivered natural gas prices compare to those of other fuels (e.g. coal, residual fuel, nuclear, etc.) and LNG from competing sources (such as Qatar, Australia, etc.) will determine the feasibility of expansion into new markets. However, for now, the long term future looks bright for U. S. natural gas and LNG.
To read the article in its entirety, please go to http://www.rigzone.com/news/oil_gas/a/148042/Localized_Approach_Could_Grow_GasFired_Powers_Global_Reach/?all=HG2.
Russell T. Rudy Energy, LLC buys oil, gas and mineral interests nationwide. Please call (800-880-0940), or write (info@rudyenergy.com ) to let us know if you agree, disagree or would just like to comment on this, or any of our posts.
