Delta Scan: The Future of Science and Technology, 2005-2055: Increasing Role for Liquified Natural Gas

Key Pages

Category:
Science and Technology

Domain:
Energy

Keywords:
Energy - natural gas, methane, LNG, energy source

Outlook:
If construction of LNG transportation infrastructure accelerates along with demand, natural gas could, within the next 50 years, join oil as the second essential energy commodity.

Summary Analysis:
Natural gas (methane) is by far the cleanest-burning fossil fuel. Given its global abundance and cleaner emissions, it has become the power generation source of choice for industrialised nations. But its transportation poses a challenge: because methane is a gas, it must be chilled to extreme temperatures to condense it into a liquid (liquefied natural gas or LNG) for transport. A widespread transportation infrastructure does not exist today, and the cost of building this infrastructure has been a significant retardant to the use of methane as an energy source. Given the rising demand for natural gas and the constrained supply due to a dearth of infrastructure, prices have spiked dramatically.

Demand for energy will probably continue to rise, and demand for ‘clean energy’ will probably rise faster still, creating brisk growth in the demand for natural gas. A rapid increase in the rate of infrastructure construction is a likely response to the growth in demand. This would help alleviate some supply constraints and could result in natural gas becoming interchangeable with oil in the commodity markets. Over the next 50 years, natural gas could gradually come to could mimic oil’s price volatility, which would impact on economies around the world.

Implications:

Growth in importance to economies of natural gas price fluctuations
Potential for pollution from energy production per unit output to decline significantly, although this may be partly offset by overall growth in energy consumption
Continued transformation of oil companies to 'energy' companies as they pursue sources of natural gas with the same zeal as oil reserves
Potential for future wars to be fought over secure access to adequate supplies of natural gas
Conflict between December 2005 and February 2006 between Russia and Ukraine over gas prices and the transport of gas to Western Europe.

Early Indicators:

Dramatic growth in consumption of natural gas over the past 10 years
Price volatility of natural gas over the past few years

What to Watch:

Growth rates of natural gas consumption in the world continue to escalate relative to other energy sources.
Significant new natural gas pipeline and LNG port construction projects are announced.
Russia leverages its vast wealth of natural gas and oil deposits to significantly revive and grow its political and economic clout in the world.

Parallels/Precedents:

Impact of oil on world economies and politics

Enablers/drivers:

Continued innovation in natural gas exploration and extraction techniques
Continued demand by consumers for cleaner sources of energy
Continued regulatory approval for natural gas transportation infrastructure projects
Acceleration of construction of natural gas transportation infrastructure
Continued high energy prices, driving faster investment into natural gas exploration, development, and transportation

Leaders:
Regions:

US
Europe

Institutions:

Center for Liquified Natural Gas [link]
Federal Energy Regulation Commission [link]
World Energy Council [link]
World LNG Technology Summit [link]
European Natural Gas Vehicle Association [link]
BP [link]
Royal Dutch Shell [link]
Qatar Petroleum [link]

Figures:

Sources:

"Average Price of Natural Gas Delivered to U.S. Consumers, 1967–2000." US Energy Information Administration. [link]
"Natural Gas Delivered to Consumers in the United States, 1930–2000." US Energy Information Administration. [link]
"Natural Gas." UNCTAD Info Comm. [link]
"The Natural Gas Explosion." Economist. Feb 28 2005 [link]
Jensen, J. "The LNG Revolution." Energy Journal. Vol 24 no. 2. 2003 [link]
Stern J. "Security of European Natural Gas Supplies." Royal Institute of International Affairs. July 2002 [link]
"LNG in Europe: an Overview of Import Terminals." King & Spalding International. Feb 2006 [link]

At A Glance:
When:
21–50 years +

Where:
Global

How Fast:
Years

Likelihood:
Medium-Low

Impact:
Medium-Low

Controversy:
Low

Related Outlooks:

About this outlook: An outlook is an internally consistent, plausible view of the future based on the best expertise available. It is not a prediction of the future. The AT-A-GLANCE ratings suggest the scope, scale, and uncertainty associated with this outlook. Each outlook is also a working document, with contributors adding comments and edits to improve the forecast over time. Please see the revision history for earlier versions.

Category:	Science and Technology
Domain:	Energy
Keywords:	Energy - natural gas, methane, LNG, energy source
Outlook:	If construction of LNG transportation infrastructure accelerates along with demand, natural gas could, within the next 50 years, join oil as the second essential energy commodity.
Summary Analysis:	Natural gas (methane) is by far the cleanest-burning fossil fuel. Given its global abundance and cleaner emissions, it has become the power generation source of choice for industrialised nations. But its transportation poses a challenge: because methane is a gas, it must be chilled to extreme temperatures to condense it into a liquid (liquefied natural gas or LNG) for transport. A widespread transportation infrastructure does not exist today, and the cost of building this infrastructure has been a significant retardant to the use of methane as an energy source. Given the rising demand for natural gas and the constrained supply due to a dearth of infrastructure, prices have spiked dramatically. Demand for energy will probably continue to rise, and demand for ‘clean energy’ will probably rise faster still, creating brisk growth in the demand for natural gas. A rapid increase in the rate of infrastructure construction is a likely response to the growth in demand. This would help alleviate some supply constraints and could result in natural gas becoming interchangeable with oil in the commodity markets. Over the next 50 years, natural gas could gradually come to could mimic oil’s price volatility, which would impact on economies around the world.

	Implications:	Growth in importance to economies of natural gas price fluctuations Potential for pollution from energy production per unit output to decline significantly, although this may be partly offset by overall growth in energy consumption Continued transformation of oil companies to 'energy' companies as they pursue sources of natural gas with the same zeal as oil reserves Potential for future wars to be fought over secure access to adequate supplies of natural gas Conflict between December 2005 and February 2006 between Russia and Ukraine over gas prices and the transport of gas to Western Europe.
	Early Indicators:	Dramatic growth in consumption of natural gas over the past 10 years Price volatility of natural gas over the past few years
	What to Watch:	Growth rates of natural gas consumption in the world continue to escalate relative to other energy sources. Significant new natural gas pipeline and LNG port construction projects are announced. Russia leverages its vast wealth of natural gas and oil deposits to significantly revive and grow its political and economic clout in the world.
	Parallels/Precedents:	Impact of oil on world economies and politics
	Enablers/drivers:	Continued innovation in natural gas exploration and extraction techniques Continued demand by consumers for cleaner sources of energy Continued regulatory approval for natural gas transportation infrastructure projects Acceleration of construction of natural gas transportation infrastructure Continued high energy prices, driving faster investment into natural gas exploration, development, and transportation
	Leaders:	Regions: US Europe Institutions: Center for Liquified Natural Gas [link] Federal Energy Regulation Commission [link] World Energy Council [link] World LNG Technology Summit [link] European Natural Gas Vehicle Association [link] BP [link] Royal Dutch Shell [link] Qatar Petroleum [link]
	Figures:
	Sources:	"Average Price of Natural Gas Delivered to U.S. Consumers, 1967–2000." US Energy Information Administration. [link] "Natural Gas Delivered to Consumers in the United States, 1930–2000." US Energy Information Administration. [link] "Natural Gas." UNCTAD Info Comm. [link] "The Natural Gas Explosion." Economist. Feb 28 2005 [link] Jensen, J. "The LNG Revolution." Energy Journal. Vol 24 no. 2. 2003 [link] Stern J. "Security of European Natural Gas Supplies." Royal Institute of International Affairs. July 2002 [link] "LNG in Europe: an Overview of Import Terminals." King & Spalding International. Feb 2006 [link]

At A Glance:	When:	21–50 years +
	Where:	Global
	How Fast:	Years
	Likelihood:	Medium-Low
	Impact:	Medium-Low
	Controversy:	Low