PowerPoint Presentation

[Virtual Presenter] What is Gas? Essential Natural Gas Facts Natural gas is often referred to as simply “gas.” This can be confusing since natural gas is an entirely different substance from the gasoline used in cars, which is a refined form of oil. . Natural gas gets its name from its gaseous state and consists mostly of methane: one carbon atom and four hydrogen atoms. Up to 20% of the gas can, however, consist of varying amounts of other hydrocarbons such as ethane, propane, butane, and sometimes smaller amounts of carbon dioxide, oxygen, and nitrogen. “Dry” natural gas is almost pure methane, while “wet” natural gas has larger amounts of the other compounds. In this energy profile, we will refer to gas, natural gas, and methane interchangeably. Coalbed methane, tight gas, shale gas, and methane hydrates are all natural gas found in different geological contexts. We will call these unconventional gas. Because of its gaseous state natural gas must be measured in cubic metres (m3). A single cubic metre can contain 38.4 MJ of energy. 165 cubic metres of natural gas is roughly equivalent to one barrel, or 0.15 cubic metres, of oil (depending on the grade). The 19th Century was defined by coal and the 20th by oil. The 21st Century is looking increasingly set to be dominated by natural gas. Like coal and oil, gas is a fossil fuel formed from the cooking of decayed organic material over millions of years. Gas, however, has unique characteristics that can give it an edge over coal and oil in the 21st Century, without some of the drawbacks inherent in many renewable energy technologies like wind and solar. Growing exploitation of gas is not without its risks, however. Gas is more versatile than oil or coal, and can be cheaply used for heating, electricity generation and powering vehicles. Also, unlike oil, and to a lesser extent coal, there is a lot of gas left in the ground. The estimates of how much are buried underground and available to humanity have been increasing exponentially over the past fifty years. These discoveries have been driven by rising interest in gas and a corresponding surge in gas exploration around the world. New technologies have allowed for the development of so-called unconventional gas reserves, like shale gas, tight gas and methane hydrates. This very recent development is a game changer for the global energy system and means that gas can meet much of the world's energy needs for perhaps a century or more..

[Audio] Another major factor driving interest in gas is its reduced environmental impact. Burning gas gives off much fewer toxic emissions than coal or oil. For the same amount of energy produced, gas emits 30% less carbon dioxide when burned than oil, and as much as 45% less than coal. This will give natural gas an economic leg up over these more traditional fossil fuels in the decades ahead when carbon taxes or cap and trade systems are likely to come into play. There are other environmental issues, such as the potential that fracking, essential for unconventional gas extraction, can pollute local water supplies. This makes many people hesitant to support the full-out development of natural gas resources. Canada holds considerable gas reserves and has the fourth highest gas production in the world, driven by proximity to the American gas market, the world's largest, and the presence of some corporate world leaders in natural gas extraction technology. As with oil, Alberta leads the way in Canada with gas production and reserves. Gas can be expected to play an increasingly important role in Canada's economy. British Columbia has some gas reserves and relies upon natural gas for some of its electricity generation and heating. Natural gas development in the province is driven by unconventional gas reserves such as coalbed methane and tight gas, while the likely presence of vast quantities of methane hydrates offshore holds long term economic potential. The chief question on many analysts' and policymakers' minds today is whether this gigantic windfall of natural gas reserves has come too late for the earth's climate. On the one hand, we can reduce our climate change emissions by shifting from coal to gas in the short term, buying ourselves more time to switch to climate-friendly energy sources like wind, solar and advanced nuclear by mid-century. On the other hand there is a risk that gas may remain so cheap for so long that it will prevent renewable sources from ever becoming economically competitive..

[Audio] Where Natural Gas Comes From Like the other fossil fuels, coal and oil, natural gas is formed from the decayed remains of plant and animal life. The organic matieral is covered, compacted and pressurized by layers of sand and rock over tens of millions of years. In the case of natural gas, as well as oil, it is usually algae and zooplankton layered on the ocean's floors that formed the basis of the thick organic deposits that are the oil and gas we use today. If the organic matter descends far enough into the Earth's crust and reaches a temperature of 120˚C, it begins to cook. Eventually the carbon bonds in the organic matter break down and fossil fuels are formed. Natural gas formed in this way is called primary gas. If oil, once it has formed, continues cooking for millions more years, it too can degenerate into natural gas. This is known as secondary gas. This implies that the deeper the fossil deposits, the more heat and pressure they are subjected to, and the more likely they are to be natural gas, instead of oil. It also means oil fields are usually accompanied by natural gas deposits. Micro-organisms called methanogens can create gas. Methanogens work to break organic matter down into methane and are found in places devoid of oxygen, such as beneath the Arctic permafrost, or in the stomachs of animals (ie. cows). Gas produced this way is called biogenic gas. As this occurs very near the Earth's surface, biogenic gas is usually released directly into the atmosphere. Reservoirs of it are small and rare, and so rarely extracted. Natural gas fields can be divided into conventional and unconventional gas. Conventional gas is that found underneath porous layers of sandstone. Often found near oil fields, conventional gas fields can, with relative ease, be tapped by drilling technology that has existed since the Second World War. Until recently conventional gas extraction accounted for all but a tiny percentage of all the gas pumped.

[Audio] Unconventional Gas Reserves Unconventional gas is formed in more complex or difficult to access geological formations. Unconventional gases include coalbed methane, shale gas, tight gas, and methane hydrates. Energy experts have long thought the development of these resources as commercially unfeasible and technologically impossible.2 Over the past thirty years, however, American companies have made giant strides in turning this view on its head. Tax incentives put in place by the 1978 Natural Gas Policy Act encouraged entrepreneurs to develop two key technologies. The first was fracking, a technique first developed in the 1940s but only applied to natural gas extraction in the 1980s. Fracking involves injecting water, sand, and small amounts of other chemicals into rock formations at high pressures, causing them to crack and allowing the gas to flow. The second was horizontal drilling. Horizontal drilling is not just, as its name implies, the ability to drill sideways into rock formations, but also to drill diagonally, or even drill down to depths of thousands of feet and then change directions. These technologies have allowed drilling companies to unlock the huge gas potential in more challenging reserves. The full potential of these new unconventional resources has only really been felt in the last decade. In the past five years alone the unlocking of unconventional gas resources has turned the received wisdom on global gas supplies on its head. It does not seem hyperbolic to say that in future decades people may look back on this development as a pivotal moment in the history of energy..

Schematic geology of natural gas resources Land surface Conventional non-associated gas U.S Energy Informatvon Admjnstratton Seal Coalbed methane Conventional associated gas Oil Sandstone Tlght sand gas Gas-rich shale.

[Audio] TypeofunconventionalgasShaleGas:Thelowpermeabilityofhard,concrete-likeshaleledgascompaniestoignoreexploitinggasreservesintheserockformationsformostofthe20thCentury.Inthepastdecade,theUnitedStates,whichholdsimmenseshalegasreserves,hasspearheadeddevelopmentofthetechnologiesneededtoextractit.Asaresultofsustainedtechnologicaladvances,shaleproductionhasexploded,goingfromonly1%oftotalnaturalgasproductionin2000,to25%todayandperhapsasmuch50%by2030.TheAmericanboominshalegashasbeendubbedthe"shalegale,"upendingpredictionsthatAmericangasproductionwouldsoonsteeplydecline. CoalbedGas:Thisismethanethatiscreatedandthenabsorbedbyporouscoalseams.Themethaneisformedbybacterialdecayinsidethecoalmatrixor,atgreatenoughdepths,thermogenically.Theexistenceofcoal-bedmethanehasbeenknownforcenturiesbecauseofthethreatitposedtocoalminers,whoriskedgettingblownuporasphyxiatedbygaspockets.Naturalgasformedthiswayisinanear-liquidstateandisalmostpuremethane,withlittlehydrocarbonslikepropaneorbutane,butsmallamountsofcarbonandnitrogen.BritishColumbiaisthoughttohaveverylargereservesofcoalbedmethaneTightGas:Tightgasisatermusedfornaturalgastrappedinsidehighlyimpermeablerockformations,suchaslimestoneornon-poroussandstone.Frackingandacidizingaretwotechniquesthatmakeextractingtightgaspossible,thoughitisexpensive.Themoreexpensivegasbecomes,andthefurthertechnologyadvances,themoreattractivetightgasreservesappear.Atthetimeofwriting,tightgaswastheprimarytypeofunconventionalgasextractedintheprovinceofBritishColumbiaMethaneHydrates:ThisexoticfossilfuelisnaturalgasthathasbeencaughtinsidecrystallineH2O.Theresultingsolidissimilartoice,leadingtothemonikers "methaneice"or"fireice."Reservesofitareformedatlowtemperaturesandhighpressures.Thoughlittlewasknownaboutthesubstanceonlythirtyyearsago,itwasthoughtresponsibleforoccasionallycloggingnaturalgaspipelines.Inthe1980sand1990stheUSGSannouncedthediscoveryofvastreservesofmethanehydratesjustunderneaththeoceanflooronallofearth'scontinentalshelves.Todate,littleresearchhasbeendoneintohowmuchfireiceexistsonEarth,butavagueestimatebytheDepartmentofEnergyputsAmerica'sreservesatninequadrillioncubicmetres,astaggering1,500timesgreaterthanallofAmerica'scombinedremaininggasreserves,conventionalandunconventional. Developmentofmethanehydrateresourcesmaybemuchcloserthanmanypeoplerealize:TheU.S.andJapanarehopingtobegincommercialextractionofthesehydrateswithinthenext15to20years.Inwhatcouldpotentiallybearevolutionarydevelopment,in2013theJapaneseannouncedtheyhadsuccessfullymanagedtopumpgasfrommethanehydratedepositsforthefirsttime.AsMariavanderHoeven,executivedirectoroftheInternationalEnergyAgencysaid: Theremaybeothersurprisesinstore.Forexample,themethanehydratesoffthecoastsofJapanandCanada...Thisisstillataveryearlystage.Butshalegaswasinthesameposition10yearago.Sowecannotruleoutthatnewrevolutionsmaytakeplacethroughtechnologicaldevelopments.6 Extractiondoesnotcomewithoutseriousrisks:somescientistsspeculatethelargescalereleaseofthesetremendoushydratereservesintotheatmospherecouldaggravatetheworld'sclimateandpotentiallyleadtoabruptclimatedestabilization.

[Audio] Extracting Natural Gas Today exploration for gas is largely conducted by advanced digital seismic technology which allows geologists to accurately map natural gas deposits deep underground. Initial seismic exploration is followed by exploratory drilling, which determines the quantity and quality of the reserves available. If the gas available is deemed economically worth the effort, wells will be sunk into the ground that can pump the gas to the surface. These wells can number in the tens, hundreds or even thousands for a single gas field. Its high compressibility and low viscosity mean that higher rates of recovery can be achieved than with oil, and at a lower price. Once sucked out of the ground the gas is pumped to a nearby processing plant, which from a distance appears as a glittering labyrinth of pipes and tanks. Natural gas comes in a fairly pure form so it requires much less refining than oil. Nevertheless the refining process is complex, and involves different industrial processes for removing the oil, condensates and water, in addition to separating out the natural gas liquids (NGL) which can themselves be valuable (ie. propane and butane). Finally the sulfur and the carbon dioxide is processed out and disposed of. Transporting the gas to market is the most challenging aspect of dealing with natural gas and has been important in shaping the natural gas markets today. The cost of transport can vary widely but typically accounts for as much as two thirds of the final price. The pipelines that move gas across borders from producing to consuming regions are huge political and economic investments. They are usually located around a meter underground, protecting them from vandalism and natural disruptions that could cause leaks. With the gas pressurized and pumped along these lines at a steady pace, the pipelines can extend for thousands of kilometres (the world's longest is the West-East gas pipeline that brings gas from China's remote Xinjiang province to Shanghai, a distance of 8,700 km. Another way to transport natural gas is to liquefy it by lowering its temperature to -162˚C. Liquid Natural Gas (LNG) takes up only about 1/600th the volume of natural gas in its gaseous state, making it far more economical to transport by ship. LNG technology matured in the 1990s and is today becoming an increasingly prevalent means of transporting natural gas across oceans. Processed natural gas is piped to LNG terminals that liquefy it and pump it aboard massive LNG freighters. Once at their destination these freighters disgorge their cargo at another LNG facility which will re-gasify the gas and then pipe it to where it is needed. This technology is thought to be making the natural gas market a more global one, like oil, by breaking the regional pipeline networks that currently dominate the global gas market.

[Audio] Diagram of a combined-cycle natural gas power plant. Click this image for a description. A natural gas drilling rig in Texas..

[Audio] How Natural Gas is Used Once extracted, purified, and transported to market, natural gas has a diverse array of uses. At home it is used for heating, air conditioning and running kitchen appliances. It is an essential part of the industrial process for the manufacture of many chemicals, plastics, fertilizers or fabrics. You can learn more about the uses of natural gas at this external site. Residential Uses Industrial Uses Commercial Uses The two other primary uses of natural gas are for power generation and as vehicle fuel. We will discuss these two in more detail. Electricity Generation Natural gas is the fastest growing fossil fuel-based means of electricity generation in North America and is likely to surge in importance in the years ahead. Indeed the American Energy Information Administration's Outlook 2010 states natural gas plants will account for 80% of additional power capacity built in the United States out to 2035. Sadly, the biggest losers here are not coal and oil, but wind and solar. Natural gas is also the only source of fossil fuel power generation that is widely employed in British Columbia, accounting for around 10% of the province's electricity. For these reasons it is important to have an understanding of the unique characteristics of natural gas when used in power generation. There are three main types of power plants used to generate electricity from natural gas. These are: Steam Generation: Just like a steam-powered coal or oil plant, natural gas is burned in a boiler which heats a tank of water. The water is turned to steam which in turn spins a generator. These natural gas plants still have low energy efficiencies of 33 to 35%, comparable to subcritical thermal coal plants. These are the kind of generators at the Burrard Thermal Power Station, B.C.'s largest fossil fuel plant..

[Audio] Single Cycle Gas Turbines: A more direct means of generating electricity, a turbine is a type of internal combustion engine. It burns gas inside an internal combustion chamber and then aims the outward gas flow over the turbine's blades and spins them, generating electricity. Gas turbines have efficiencies slightly less than steam generation but their main advantage comes with the ability to turn on or off almost immediately. This makes them useful for handling peak electricity demand. Combined Cycle Gas Turbine (Natural Gas Combined Cycle or NGCC): These plants use a combination of the other two technologies, steam and turbines. It begins with a gas turbine burning natural gas. Once the hot gases that caused the turbine to spin escape from the turbine, they are piped to a steam-generating pool where they heat water, which in turn spins its own turbine. This technique can bring efficiencies of 50 to 60%, the most efficient form of fossil fuel generation yet discovered. NGCC technology has already become cheaper than coal power in most regions and is set to become the standard form of fossil fuel power in the years ahead. Natural gas has several advantages that make it an increasingly popular choice for electricity generation. Firstly, as already noted, the new combined cycle plants are the most efficient forms of fossil fuel generation ever known. The higher efficiency translates directly into a lower fuel requirement for the same electricity output. For instance a NGCC plant with 60% efficiency requires 25% less fuel than a coal-thermal plant with 35% efficiency in order to produce the same amount of electricity. Secondly, natural gas turbines and NGCC plants can be rapidly cycled, that is, they can be turned on and off in minutes or hours in response to real time electricity demand. Other types of power plants, such as coal or nuclear, can take days to warm up and then shut back down. This characteristic makes natural gas plants ideal for meeting peak electricity demands, and a good replacement for old and inefficient coal-fired plants that are currently used for this purpose in many regions, especially the United States. The Union of Concerned Scientists points out that fast-cycling NGCC plants would do a good job of complementing renewables such as wind and solar in a future low-carbon economy. Lower carbon natural gas plants could be turned on to pick up the slack when the wind does not blow or the sun does not shine, and then be quickly turned off when the weather becomes more favourable..

[Audio] A combined-cycle natural gas power plant in Utah..

[Audio] Natural Gas Vehicles A natural gas-powered bus in Washington D.C Compressed Natural Gas (CNG) is used to fuel a number of vehicles, known as NGVs (Natural Gas Vehicles). Since natural gas is a combustible fossil fuel just like oil, it is simple to adjust a car to run on natural gas. The main difference is a larger tank is needed to house the gas that is compressed at 3,600 PSI. A vehicle running on natural gas emits fewer dangerous emissions than a petrol-powered car: 93% less carbon monoxide, 50% less reactive hydrocarbons and 33% less nitrogen oxides. There is also a 25% savings in climatechange causing carbon dioxide. The natural gas itself is also cheaper than oil, and the vehicles are safer since the fuel tanks are much thicker, and if they are ruptured in an accident the gas simply dissipates into the air. On the down-side their range is only about half that of gasoline-powered vehicles, and there are few places to fill up. The sticker price is another impediment to widespread adoption of NGVs: they are more expensive at the dealership than petroleum cars. The larger space for fuel storage makes natural gas a more appealing choice for fleets of high-mileage vehicles like buses and long-haul trucks. These could even be designed to run on much further compressed liquefied natural gas, extending their range..

[Audio] Economics of Natural Gas Natural gas is an extremely versatile fossil fuel with a range of applications. This makes the price of natural gas as a commodity a central aspect of natural gas's economic viability. If the price is high or rising and falling rapidly, this can have a ripple effect across many different industries. So what are the many factors that affect the price of natural gas? Natural Gas Supply On the supply side the factors include: Pipeline capacity: Natural gas requires a vast and complex infrastructure to get the gas from the wellhead to the consumer. A lack of infrastructure, specifically the quantity of pipeline capacity, can limit gas availability and cause price rises. Drilling rate: A gas company can have tens of thousands of drilling rigs in operation, but can limit how many are pumping gas at any given time. This decision is usually dependent on the gas price: When the price is high more rigs will drill, increasing supply; when the market has a glut of natural gas, the price is low, and a company will halt drilling on some of its rigs, which in turn decreases supply. Natural disasters: Hurricanes and earthquakes can disrupt supply, in the Gulf of Mexico during Hurricane Katrina for instance. Geopolitical disturbances: While this is less the case with natural gas than with oil, geopolitics can lead to supply disruptions, as we have already seen with the fraught relations between Russia's Gazprom and Ukraine. Storage and imports: A company or government can store or import natural gas and release it onto the market when there is a shortage. Long term depletion: While natural gas reserves are centuries from being exhausted globally, many conventional fields around the world are peaking, leading to a decreased drilling rate. Italy's natural gas production, for instance, peaked in 1995 at around 17 billion cubic metres, and has since declined by over 50%. Unlocking of unconventional resources: This point is rapidly making long term depletion irrelevant. Tight gas, shale gas, and coalbed methane exist in greater quantities than conventional gas reserves, and are only just beginning to be tapped. B.C.'s unconventional gas reserves are thought to be over 50 times greater than her current proven conventional gas reserves. Development of tight gas deposits and breakthroughs in shale gas drilling technology are making these unconventional deposits a bigger part of the energy picture all the time. Since developing these sources is more expensive, they will likely only see widespread development when the price of gas is high..

[Audio] Natural Gas Demand There are several factors affecting demand for natural gas. Weather: Natural gas is used directly by many homes and businesses for heating, so demand for natural gas will rise during cold winters. Alternatively people will turn on their electric air conditioners during hot summers. As an increasing share of the electricity market is served by natural gas, this can lead to higher natural gas demand. Economic output: A growing economy requires increasing amounts of gas for electricity or industrial processes. A depressed economy will need less of both. For instance, American natural gas demand fell 5% between May 2008 and May 2009, following the banking collapse of late 2008. Long term economic expansion: The US Energy Information Administration expects residential energy demand to increase 25% between 2002 and 2025 as homes get bigger, have more appliances, and there are simply more of them. Furthermore almost 70% of new homes being built rely on natural gas for heating, beating out once dominant electricity and oil by large margins. In the industrial sector American natural gas demand is expected to rise 1.78% a year. The rise will be much steeper in developing economies. The Price of Natural Gas With so many factors affecting both supply and demand, it is a small wonder that the price of natural gas has been so volatile over the past two decades, especially in the North American market. In the decade leading up to 2008, demand rose as more people lived in natural gas cooled or heated homes, average summers became hotter and winters colder, and the economy boomed. At the same time the market feared the depletion of natural gas supplies as commentators forecast a looming peak in North American gas production. At the opening of the decade the price was just over $2.00 per million Btus. It then proceeded to see-saw wildly back and forth, hitting a peak of over $14.00/mmbtu in late 2005 when Hurricane Katrina caused many of the Gulf of Mexico's gas rigs to temporarily shut down Since the summer of 2008 however the North American price plunged from its highs by around 75%, and has been hovering around $3.50-$5.00/mmbtu range for the past three years. There are two factors that are primarily responsible for this, one demand and one supply. The global recession that began in 2008 caused a fall in natural gas demand as industrial output decreased and people worked to save money on their gas bills..

[Audio] The supply factor is the rapid improvement of drilling technology and the unlocking of the trillions of cubic metres of gas in unconventional gas reserves. Bodies like the Potential Gas Committee at the Colorado School of Mines have increased the United Sates' estimated reserves from 1,525 tcf in 2006 to 2,170 tcf in 2010. As one of the authors of the Committee's year-end assessment wrote: Our knowledge of the geological endowment of technically recoverable gas continues to improve with each assessment. Furthermore, new and advanced exploration, well drilling, completion and stimulation technologies are allowing us increasingly better access to domestic gas resources—especially 'unconventional' gas—which, not all that long ago, were considered impractical or uneconomical to pursue. As a result of the ongoing optimism about natural gas supplies into the decades ahead (this estimate gives the United States alone 100 years of supply at current production rates) the price is expected to stay low for some time. Natural gas futures, traded at Henry's Hub, considered an indicator for natural gas prices continent-wide, are trading at under $4.00/mmbtu until November 2013, and then only rising to $5.38/mmbtu by December 2019 (as of April 2012).Investors expect the new supplies mean the wild price jumps of the mid-2000s are a thing of the past. Economics of Natural Gas for Power Generation Economically, electricity derived from natural gas is virtually as cheap or cheaper than all other sources of power. The MIT report, the Future of Natural Gas, estimated the levelized cost of electricity in 2005 in the United States to be roughly 5.6 cents per kWh. This was very close to coal's 5.4 cents per kWh. The report believes the price of electricity will rise all across the world by anywhere from 30-100% between 2010 and 2030 thanks to surging global demand, though by how much will depend upon the actions taken by governments to curb greenhouse gas emissions. In the most likely future carbon tax scenarios, natural gas generation will begin to squeeze coal out of the electricity market until well after mid-century when truly carbon-free energy sources (predominately advanced nuclear power, a scientific panel predicts) gain much deeper market penetration..

[Audio] In keeping with this projection of rising electricity prices, the U.S. Department of Energy believes that by 2016 the levelized cost of electricity from a newly commissioned NGCC plant will rise to 6.6 cents per kw/h. Electricity from coal on the other hand, which will be hit by higher building and permitting costs, will rise to 9.5 cents per kWh. The price rises to 14 cents per kWh when carbon capture and sequestration is factored in. In the short to medium term, natural gas generation is likely to see economic benefits from government action to curb greenhouse gas emissions. The MIT report predicts that in the most likely future carbon tax scenarios, natural gas generation will begin to squeeze coal out of the electricity market until well after mid-century when truly carbon-free energy sources (which they predict will be predominately advanced nuclear power, not wind or solar as many would expect) gain much deeper market penetration. In fact, by 2016, electricity from conventional combined cycle natural gas plants becomes so cheap compared to all the other sources of power that there are fears the increasing and likely long-lived competitiveness of natural gas will price wind and solar power out of the market, just when they are beginning to gain traction.28 As the IEA's director Nobuo Tanaka explained, "one of the factors leading to the success of natural gas is the uncertainty in climate change policy. Natural gas production is growing rapidly with the expansion of shale gas, but most renewable energy technologies still require additional support to achieve widespread market penetration. The prices of renewable technologies, such as wind turbines, are decreasing, but RPSs and other government support systems are still needed to encourage growth in the industry... It should be noted that these prices are for the United States as a whole, and do not apply to British Columbia's fairly unique position. Natural gas plants only account for around 10% of the province's generating capacity, the remainder being from huge hydroelectric projects, many over 50 years old. The price of power from these plants is extremely low because the province has been receiving power from them since their construction. They have no fuel costs, and fairly small maintenance costs levelized over time. This power has been included in the province's "Heritage Contract" and appraised at around 5.3 cents per kWh. The combination of these heritage projects, with cheap power from natural gas plants, mean that British Columbians have some of the smallest electricity bills in North America.

[Audio] Burrard Thermal, a steam-driven natural gas power plant just outside Vancouver. While it looks small, this plant can provide an enormous amount of power.

[Audio] Natural Gas and the Environment Natural gas is widely touted as a good alternative to coal and oil, on a local level, and from a climate change perspective. That is not to say natural gas is pollution free. All fossil fuels release a number of pollutants into the air when burned: carbon monoxide, nitrogen oxides, sulfur oxides, particulates, and carbon dioxide, all of which have effects upon the environment, both local and global. Natural gas emits less of these pollutants than coal and (with the exception of carbon monoxide) oil. Despite the fact that natural gas emits some emissions, it is often described as "clean." This is, as you can see from the charts below, a relative term. There are other caveats. Paradoxically, natural gas itself, methane, is the most powerful greenhouse gas known: one kilogram of methane is equivalent to 21 kilograms of carbon dioxide in its ability to trap heat. Therefore, though methane emissions are equivalent to only around 1.1% of the United States' total greenhouse gas emissions by weight, that jumps to 8.5% if measured by total global warming potential. Methane release into the environment can come from a wide range of sources as diverse as landfills, livestock and coal mining. The largest contributor by a significant margin however is methane accidentally released during the extraction, processing and transportation of natural gas, about a third of the United States' methane emissions. This is a small, but significant, slice of both the United States and Canada's contribution to global warming and is added on top of the carbon dioxide emitted when the methane successfully extracted is burned in power plants, home heaters or factories.32 A major fear revolves around the tantalizing and enormous quantities of methane hydrates on the ocean floor. If extracted carelessly, they could accidentally be released into the atmosphere en masse, a serious and sudden hit to the climate that could prove catastrophic.

[Audio] As can be seen, for the same amount of energy produced, natural gas emits 71% as much carbon dioxide as oil, and 56% as much as coal. When the greater efficiency of NGCC plants over coal plants is taken into account, the carbon emissions per billion Btus drops another 25% compared to coal. This has prompted many energy experts to advocate natural gas as a "bridge" technology from the more carbon intensive fossil fuels, especially coal. As the Union of Concerned Scientists say: Because energy produced from natural gas has much lower associated carbon emissions than these other fossil fuels, natural gas could act as a "bridge" fuel to a low-carbon energy future. Particularly in the electric sector, natural gas has the potential to ease our transition to renewable energy. Natural gas is by no means a panacea for the environmental problems caused by our energy use. There is broad agreement among climate scientists that carbon reductions of about 80 percent will be needed to avert the worst effects of climate change, so simply switching to natural gas from coal and oil will not ultimately bring about the necessary reductions.

[Audio] Politics of Natural Gas The primary geopolitical issue surrounding natural gas is the issue of energy security. The world's large reserves of natural gas largely overlap with the world's oil supplies. Natural gas, unlike oil, is for the most part transported to market via pipelines. As stated in the Future of Natural Gas, an interdisciplinary study by MIT, "long pipeline connections create dependency between buyers and sellers and give substantial power to those who control pipelines." The leverage of those who control gas pipelines has been illustrated by the ongoing dispute between Ukraine and Russia over transit fees on gas Russia exports to Europe. The dispute led to temporary disruption of gas to Europe in 2009, and led the EU to begin casting around for more secure sources of gas.This issue made headlines again during the Ukrainian political crisis of 2014, with many American lawmakers pressuring the Obama Administration to expand LNG exports to Europe to break their dependency on Russian energy. Those who control the pipelines also have more power to set prices. The huge capital investments required for pipelines mean suppliers sell gas at prices set in long term contracts in order to guarantee a market for their product. In some instances the suppliers demand much higher prices than would otherwise be the case in a globalized spot market. Russia's Gazprom, for instance, is working hard to promote long term contracts with European utilities to get them to sign on to multi-year contracts with prices set high. Liquid Natural Gas (LNG) holds the potential to break the monopoly of pipelines and improve energy security throughout the world. It is a technology that has been in existence for 40 years but only recently have the costs of this technology come down enough to make it economically viable. Energy analysts believe the effect could be to bring about a global spot market for gas, as there is with oil, where gas can be delivered where it is needed, when it is needed, surpassing trade barriers and higher long term contract prices set by suppliers. Qatar has been leading the way with LNG, shipping gas to Europe in a bid to undercut Gazprom's share of the European market..

[Audio] Around the World Natural gas's role in the world today, and its future outlook, hinges on how much of it is left in the ground, and how fast it is being used up. Let us examine each of these questions in turn. Global Reserves How much natural gas is left in the ground, in global reserves, is a difficult question to answer. Historically, estimates have fluctuated wildly since natural gas first entered the marketplace. Measuring them accurately is complex because the concept of reserves is as much an economic as a geological one. Concepts such as proven reserves, reserve growth, and undiscovered resources need to be understood in order to form a clear picture of what the future may look like. The total reserves, however, can be defined as the amount of gas that will be recoverable at some point in the future at a certain price if the technology for that extraction exists. When the price of gas is high reserves that would otherwise be too expensive to extract, such as those in the high Arctic or deep offshore, become economical and are moved into the "reserves" column. The idea of estimating reserves therefore has a number of assumptions built into it about the future state of the world. A number of organizations have done their best to estimate the total reserves, foremost among them the International Energy Agency and the U.S. Department of Energy. They believe the amount of gas left is vast. There are large reserves of gas on every continent, and in over 100 countries. Ninety-one of them are already producing natural gas, and because full-scale development of natural gas resources didn't begin in earnest until after the Second World War, so only around 11% of the world's gas outside North America has yet been extracted.37 There is still potential to expand production capacity to a huge degree, far more than is possible with oil..

[Audio] For a relative idea of how much gas this actually is, it is worth noting that global consumption of gas was 3.2 tcm in 2010.38 So even without taking the vast new unconventional resources into consideration, Russia alone could theoretically supply global demand for almost 15 years. As for the unconventional reserves, they are still a matter of dispute. Interest in unconventional gas resources only took off in the past half-decade, so realistic reserve estimates simply do not exist outside the United States and Canada, though that is rapidly changing. Unconventional gas reserves have, according to America's National Petroleum Council, "largely been overlooked and understudied."39 The United States Energy Information Administration has estimated the country holds 23.4 tcm of shale gas. In addition, the USGS believes 19.8 tcm of coalbed methane exists in the continental United States.40 These unconventional reserves estimates are huge, especially when compared with America's 7.7tcm of conventional gas which were, until very recently, thought to be the only gas available.41 Extrapolating these estimates globally, a study by two scientists at the University of Tokyo, Drs. Kawata and Fujita, can give a vague idea of what the total global reserves of unconventional gas could be. They give a total of 453 tcm of shale gas, 209 tcm of tight gas sands and 255 tcm of coalbed methane.42 At this early stage this study remains highly speculative, and much of the gas included in it will never be economically recoverable. Unconventional gas drilling has made the IEA confident enough to double its estimates of global gas reserves to around 920 tcm in the Fall of 2011. This is almost five times higher than their global reserve estimates in 2004.

[Audio] Nevertheless, the increasing commercial viability of unconventional gas drilling has made the IEA confident enough to double its estimates of global gas reserves to around 920 tcm in the Fall of 2011. This is almost five times higher than their global reserve estimates in 2004. AnneSophie Corbeau, a gas expert at the IEA believes "the best estimate is that new sources will stretch gas supplies to 250 years at current levels."43 Rising reserves have been an ongoing trend for decades, as the IEA's World Energy Outlook 2004 makes clear: "Reserves stood at 180 trillion cubic metres at the beginning of 2004, almost twice as high as twenty years ago.

[Audio] A Liquid Natural Gas storage tank in Massachusetts. Gas in these tanks must be stored at -162˚C, reducing it to a six-hundredth of its original volume and making it much more economical to transport..

[Audio] The IEA's optimism about natural gas is certainly reflected in the title of its recent report, the Golden Age of Natural Gas. Natural gas currently accounts for almost a quarter of the world's energy consumption and its share is growing fast. By mid-century the IEA expects it will overtake coal, and then oil, as the premier fossil fuel, and therefore the most widely used source of energy in the world. This is not to say that oil or coal are likely to be squeezed out any time soon, but rather that world energy consumption will vastly increase, an estimated 53% between 2008 and 2035, and natural gas will account for a lot of it. There are a number of reasons for this: Burning natural gas releases fewer dangerous emissions than coal or oil. As we have just seen it is comparatively abundant. It also affords improved energy security: every major economic region (North America, Europe and East Asia) has enough supplies to remain self-sustaining for an estimated 75 years at projected growth rates. Currently the United States is the world leader in natural gas production, extracting 611 billion m3 in 2010, narrowly beating Russia's 610 billion m3. Everyone else falls far behind: third is the European Union at 182 billion cubic metres, followed by Canada (152.3 bm3), Iran (138 bm3) and Qatar (116bm3). Unlike the global oil market, the world's natural gas market is not truly global, but instead broken down into three major regions which can have greatly varying prices. These are North America (primarily Canada and the United States who are largely self-sufficient), Europe (supplied by gas from Russia, the Caspian Basin and the North Sea) and East Asia (supplied by gas from Indonesia, the Middle East and to a growing extent globally traded LNG). In East Asia, where Japan was once the dominant consumer, China has emerged as a major player in natural gas, producing 83 billion cubic metres in 2009, and consuming slightly more. It is starting construction on a major pipeline to bring gas from Central Asia to its bustling Pacific metropolises. Liquid Natural Gas (LNG) is also taking on an increasingly prominent role in the cross-border gas trade. There are currently 30 liquefaction plants online in gas exporting countries. Another seven are under construction and 21 planned. The massive LNG tankers can be directed to any port in the world that is equipped with regasification equipment, a development that is allowing natural gas consumers to diversify their consumption and keep prices competitive. By 2035 global demand is expected to grow by the equivalent production of three Russias today—around 1.5 trillion cubic metres a year. The largest increase will come from China where demand could grow from five to seven times, depending on circumstances. India too will see a similar exponential increase in demand, but starting from a lower baseline, will still use only a half to a third as much gas as China.