Figure 4.12 Distribution of world natural gas proven reserves in 2004. Based on data from BP Statistical Review of World Energy 2005.
Figure 4.13 Liquid natural gas (LNG) tanker for transportation of natural gas across the seas.
day to both the United States and the United Kingdom. In the United States, the construction of some ten new LNG regasification terminals is projected within a decade, compared to only a half-dozen operating today, all of which were built more than 20 years ago. Because of the safety problems associated with the transport and handling of LNG, most future LNG terminals are expected to be built offshore. In the US and other major countries, much discussion and planning is taking place to build new LNG terminals. Because of the politics involved, the trend is to locate away from major population centers.
Japan, South Korea, and Taiwan, all of which have no gas reserves, imported together more than 70% of the world's LNG production, mainly from Indonesia and Malaysia. For them, LNG is the only economical solution because they are far from gas-producing areas and the costs to construct long-distance off-shore pipelines would be prohibitive. Undersea links are usually only practical when the distances are relatively short and sea is not too deep, as in the case of the North Sea gas network. During the past decade however, development in off-shore pipelines technology has contributed to lower the costs and make possible deep-water projects that were previously impossible such as the Bluestream pipeline under the Black Sea, which reached a maximum depth of 2150 m. Depths of 3000 to 3500 m will probably be feasible in years to come with costs competitive with LNG. The natural gas liquefaction chain, which is an expensive and very energy-intensive process, includes liquefaction, shipping, regasification, and storage. The liquefaction step, during which the gas must be cooled to -162 °C, accounts for about half of the total cost, and shipping and regasification for about 25% each. Liquefaction is usually chosen when the gas has to be transported overseas and/or distances overland longer than 4000-5 000 km, in which case the construction cost of a pipeline would be higher than for LNG. This is especially the case for the Middle-East, which accounts for 40% of the world's natural gas reserves, but is too far from the major consuming centers of Europe or the United states. In 2001 this region represented only 21% of the LNG export market and 4.5% of the natural gas export market. Of course, as mentioned previously there are also significant safety problems associated with LNG transportation and distribution. Besides accidents, LNG tankers and facilities are also potentially vulnerable to terrorist attacks.
Another way of transporting and making use of remote reserves is to convert natural gas into a liquid product, near the gas well, that can be more easily shipped in regular tankers; this is referred to as gas-to-liquid (GTL) technology. Advances in technology and increasing oil prices are stimulating new interest in these GTL processes. Within this broad strategy, two approaches seem to be the most feasible: (i) the conversion of natural gas to a liquid product resembling the light hydrocarbons present in petroleum; or (ii) its transformation to methanol. These processes have so far been based on the Fischer-Tropsch technology using synthesis gas (syn-gas) which was originally developed, using coal as a feedstock, in Germany during the 1920s. Coal is first converted into syn-gas (a mixture of hydrogen and carbon monoxide), which subsequently will yield, depending on the catalyst and reaction conditions, liquid hydrocarbons. Because of the high energy needs and relatively high production costs, the syn-gas-based production of fuels, derived originally from coal, but later from natural gas, was in the past limited to special situations such as Germany during the World War II and South Africa during the Apartheid era restriction on oil imports. Recent technical advances, including reactor design and improved catalysts, have significantly increased yields and thermal efficiency and reduced construction and operating costs. South Africa in particular, due to its decades of "forced" experience in this field, has in the 1990s opened the Mossgas GTL plants yielding 3000060 000 barrels per day ofmainly diesel fuel and gasoline. GTL plants are also complex, expensive to build and very energy-intensive, consuming up to 45% of the gas feedstock, thereby raising concerns about high CO2 emissions. In most of the world, such as in New Zealand and Malaysia, syn-gas-based plants use natural gas (methane). Methane conversion to products in the diesel fuel or gasoline range is currently not used to any significant degree. With the anticipated depletion of crude oil reserves, however, a number of oil companies are presently investing massively into GTL technologies. Sasol, in a joint venture with Qatar Petroleum, has begun the construction of a 34 000 barrel per day unit in Qatar, near the giant North Field gas reservoir (containing some 15% of the world's gas reserves) . Other companies, including ExxonMobil, Shell, Marathon Oil, and ChevronTexaco, have committed over $20 billion to the construction of GTL facilities in Qatar . These projects will each have a production capacity ranging from 120000 to 180 000 barrels per day, and cost between $5 and $7 billion per plant. They will produce mainly diesel fuel and small amounts of other products, including lubricants and motor oil. Due to the economy of scale of such large installations, the cost to produce a barrel of GTL diesel is expected to be in range of $15-$20, which is extremely competitive with recent oil prices. Furthermore, diesel fuel obtained from GTL processes has the advantage of being almost free of most impurities (especially sulfur) contained in regular diesel fuel, and is thus less polluting.
In order to be more easily handled and shipped over long distances, natural gas (i.e., methane) can also be converted to methanol, a convenient liquid. Today already, the production of most of the methanol in the world comes from the conversion of methane first to syn-gas and then to methanol. The direct oxidative conversion of methane to methanol, without going through syn-gas, is however the highly desirable technology of the future and is being developed as part of the "Methanol Economy" (see Chapter 12).
The amount of natural gas reserves referred to generally pertains to conventional natural sources - that is, gas which accumulates under non-permeable rocks alone or in association with oil. There are also considerable resources of so-called unconventional natural gas sources; some of these are already being recovered. They involve gas extracted from coalbeds (coalbed methane), from low-permeability sandstone called "tight sands" and shale formations. Gas hydrates, primarily methane hydrate present at the continental shelves of the seas or underlying the tundra of arctic areas such as Siberia, are also abundant and very significant. Although no suitable technology to utilize these effectively exists today, they represent a very large untapped unconventional gas source. In the United States, during the past 20 years, the use of unconventional gas has grown rapidly, helped significantly by tax incentives. Mainly coalbed methane and tight sand gas account now for about one-fourth of the total U.S. domestic production, helped by the decreasing production of conventional gas and higher natural gas prices. However, they remain more expensive to produce than conventional gas and are presently only of modest interest in the rest of the world, due to the still-abundant sources of conventional gas.
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