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November 26th, 2013 at 10:08 am

Natural gas is set to be the next big energy trend

Global consumption of natural gas will rival the use of coal and steal the market share from oil on the world market.

The “next defining energy trend” is poised to be natural gas as it increasingly becomes a primary global energy source, according to a report released today by GE.

 

 

Dubbed the “Age of Gas,” this trend will extend over the next 15 years and see global consumption of natural gas rival the use of coal and steal market share from oil on the world market, the report says.

“Natural gas is shifting from a regional and often marginal fuel to becoming a focal point of global energy supply and demand,” says the report titled: “The Age of Gas & The Power of Networks.”

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In 2012, natural gas represented about 24 percent of the world’s primary energy supply, that’s equal to 63 million barrels of oil per day, according to the report, or about 70 percent the size of the global oil market today. The report predicts that by 2025 gas consumption will increase by more than third, making it 26 percent of the world’s primary energy use.

The report expects the power sector will be a key factor in the demand for gas and expects a 50 percent increase in the use of gas to generate electricity as the world’s power systems continue to expand.  “Economic and environmental factors are driving the shift away from oil and coal toward natural gas and renewables in the power sector,” the report says. “There is a window of opportunity for gas to be developed profitably and still compete effectively against internationally-traded coal if it falls within the right competitive pricing range,” according to the report.

Innovation
Innovation plays a starring role in the production of gas, from its early extraction from coal in the 19th century to the “fracking” processes used to shake loose the gas trapped in ancient shale rock formations.

The report breaks down technological innovation in gas according to how it contributes to network development.  “Upstream” innovation focuses on supplying gas networks, including technology that improves efficiency and lower costs of large-scale remote gas projects “such as deep water gas, sour gas, and other large conventional gas developments,” the report says.

Other technologies will contribute to securing, integrating and optimizing gas systems from an efficiency as well as environmental and safety standpoint.  And there are technologies that expand the range of applications for the use of gas, too.

Service Ecosystems
Natural gas depends on a series of networks that link its production to eventual end use.   These networks essentially feed on themselves.  “One defining characteristic of networks is that they become more valuable with size as more entities join the network,” the report says.  “These characteristics facilitate the development of adjacent networks, uncovering hidden opportunities to create value as new links are established.  Network growth creates greater flexibility and improved economics, which in turn fosters further growth,” the report says.

Although large pipelines and trans-ocean shipping projects will “anchor” future gas growth, “a new generation of smaller modular ‘satellite’ systems” will begin to evolve, the report says.  “As these networks integrate, gas delivery will become more flexible and more resilient,” the report says.  “The integration of gas systems over the next decade is going to bring unprecedented flexibility to the gas market, driving significant institutional and market changes, and also opens the way for gas to capture a larger share of the energy demand.”

Digital Networks
Leaning on the power of the Industrial Internet will be critical during the Age of Gas.  Already half of the gas pipelines in the U.S. are 25 years old.  In order to better monitor and anticipate potential problems, digital infrastructure is being deeply imbedded into the fabric of energy networks, the report says.

“The goal is to integrate data collection, processing, reporting, and analytics in smart ways,” the report says. “Better data and deeper analytics may allow operators to push the operating envelope of pipeline systems allowing additional throughput and revenue due to better business insight,” the report says.  These digital networks will also provide operators with “predictive analytics” allowing them to sniff out problems before they happen, thus reducing downtime and thwarting potentially harmful pipeline breaks.

Energy System Resilience
The world depends on trustworthy energy systems, this is particularly true for fuel and electric power grids.  A system that relies on a single energy source is more vulnerable.  Enter gas as a stalwart energy system.  “Gas is well positioned to work with other energy sources to improve overall energy system resilience,” the report says.  “Furthermore, as gas systems become more intelligent with new digital and software technologies, these benefits will likely grow. “

The report notes that gas networks—often located underground—are better suited than above ground power grid counterparts to survive harsh storms or other weather events.  “In this way, gas can contribute broadly to the economic resiliency by providing diversification, redundancy, and backup systems,” the report says.

The use of gas in such situations is creating a new concept the report calls “grids-within-a-grid” and “multi-source micro grids” to increase resilience and reaction time in the face of disruptions.  This works the advantage of public utilities such as hospitals, waterworks and government agencies, which have to operate during natural disasters.  “However, in other events, for example, earthquakes or typhoons (for Liquid Natural Gas ships) gas systems may be disrupted. This is why gas, power, and liquid fuel networks are best when optimized to support each other,” the report says.

Not a Done Deal
Natural gas will only reach its full potential if it can “support safe, efficient and reliable capture and extraction,” the report says.  In other words: keep it clean.

The “Age of Gas” isn’t a “forgone conclusion” the report notes, as there is a complex calculus of policies and procedures that must all play out to make it a reality.

“However, there is real potential for natural gas, enabled by the power of denser and more flexible global networks, to win global market share from coal and oil and in so doing to transform the global energy landscape in beneficial ways,” concludes the report.

Photo credit: AEIdeas

Via Ideas Lab

 

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