In November 2015, when 195 countries signed the Paris climate change agreement, it was concluded by experts of oil and gas industry that the deal’s biggest winner would be natural gas. The agreement’s framework was such that it pushed / forced countries to have their own domestic limits on carbon emissions to comply the agreed norms in the summit in specified time frame. The immediately affected industry was oil and coal-fired power plants as this is one of the major polluting industries in the world, emitting a large amount of greenhouse gases affecting climate change.
“The Paris climate agreement is, if anything, a huge win for natural gas, which is the only thing that can make a meaningful difference in the short term,” said Joseph Baran, from oil and gas consulting group Bertison-George, LLC. Natural gas has emerged as one of the most preferred fuels globally and is being used by various end-user industries. The major advantage is, it’s clean burning nature significantly lowers emissions as compared to other fossil fuels. With the increase in its usage, the gas producing countries in the world have increased their capacity and are looking forward towards the strong demand and growth from the Asia.
International Energy Agency (IEA) had also predicted a surge in demand for LNG globally, but in its recent report it has revised its estimate and expects global demand only to rise only by 1.5% per annum. There are several reasons for the slump in the growth pattern of the LNG industry. One is the huge drop in coal prices making it difficult for the gas producers to compete. Another major reason is renewable energy is catching very fast. Its benefits, in the long run, are attracting more investments and its robust deployment is constraining gas industry’s ability to grow.
Also, there is a glut of natural gas worldwide. Gas markets are expected to remain oversupplied until 2018 and demand and supply situation won’t align until 2021. Globally the natural gas production is expected to jump by another 45% through 2021 and the major contributors will be the United States and Australia. The infrastructure in handling the gas calls for very big investments, on the land the producers transport through pipeline but when it has to cross ocean it needs to be liquefied and then should be gasified at the point of use again. So this calls for specialised export and import terminals at the ports to handle LNG. The best solution for transportation across oceans is – freeze the gas to a temperature of -2600F to create LNG – reducing the gaseous form’s volume by a factor of 600.