With the shale revolution well-entrenched, natural gas industry observers on Monday debated the direction the nation should take in order to best exploit the abundance of gas currently hitting the North American market, which some pointing to transportation and others to power generation.
The role of gas in future transportation applications was a large focus at the LDC Gas Forum Midcontinent in Chicago Monday.
"It's getting harder to say no to natural gas" as compressed and liquefied natural gas offer much-cheaper alternatives to traditional diesel fuel, said Paul Smith, senior director of infrastructure with America's Natural Gas Alliance.
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Beth Reese, president of Nicor Gas, also touted the transportation sector as an avenue for "top-line growth" in gas demand, although she sees CNG as a "clear winner" over LNG as consumers seek alternatively fueled vehicles that are not electric.
Reese said worldwide, the natural gas vehicle sector is poised to grow to 65 million from 15 million NGVs at present over the next decade. Although North America's share is currently very small -- just 140,000 vehicles -- she said it presents "an untapped market in our own backyard."
However, she also sees a "chicken and egg" challenge facing the NGV industry -- CNG refueling stations will not be built without committed demand, while car companies will not build and consumers will not buy NGVs without refueling stations.
On the other hand, Frank Casey, gas sales lead with ExxonMobil subsidiary XTO Energy, downplayed transportation as a key driver of future gas demand, saying traditional liquids fuels will remain the dominant fuel source.
ExxonMobil projects gas demand in this sector will grow to just 4% of the overall fuel mix in 2040 from 1% at present.
Still, "we do see opportunities in the heavy-duty and marine sectors." In particular, gas has the potential to replace in the marine segment to meet new environmental standards, Casey said.
Instead, Casey focused on power generation as the primary driver for future gas demand, which ExxonMobil predicts will grow by 90% through 2040. He said gas could comprise 36% of the power-sector mix by 2040 from 20% in 2008.
"Natural gas is kind of a no-brainer" for generators, added Smith, noting that it represents the lowest cost for new generating technologies.
Looking at the shorter-term picture, Jack Weixel, director of energy with Platts unit Bentek Energy, said 19.2 GW of new gas-fired generation is expected to be built through 2017. If run at 50% capacity, this new load could comprise some 1.7 Bcf/d of new gas demand over the period.
Weixel said that while new demand opportunities for 2013 are likely limited, 2014 is when significant gas demand that is "sustainable and systemic" will begin to pick up in a big way.
"It's a long slog" in the power sector, he said, noting that gas is slowly and steadily capturing a greater percentage of demand.
However, "the best game in town" as a near-term demand driver is Mexico, Weixel believes. With the nation's own power sector booming, pipeline companies have proposed a total export capacity of 4.3 Bcf/d by 2015, he said.
--Jessica Marron, firstname.lastname@example.org
--Edited by Derek Sands, email@example.com