Long-Term Future of Natural Gas Debated at the World Gas Conference 2018

Last month, more than 12,000 attendees from around the world converged in Washington, DC to discuss and shape the future of the natural gas industry.  Attendees included current and former U.S. Secretaries of Energy, U.S. Senators, ministers of energy from five countries, the CEOs of practically all the major oil and gas companies – upstream, midstream and downstream.  The venue spanned more than six city blocks and was sprinkled with libations, food, dancers from around the world, drones, rovers, pickup trucks, gas industry equipment, and large clumps of fans watching live-streamed World Cup soccer games.

The breadth and depth of topics covered at the conference was impressive – from policy and regulatory strategies, large and small-scale LNG, transportation market, geopolitics to methanol emissions and environmental footprint. However, the biggest question in discussion was the long-term future of natural gas. In many markets, the near-term future certainly looks bright, but others are moving towards policies that restrict or eliminate natural gas as part of the energy mix.

How will gas play in a world widely acknowledged even at this venue to be decarbonizing?

Bridge Fuel? Foundation Fuel? Possibly an emerging renewable fuel?

We believe that the key trends impacting the answer to this question are:

Gas availability at low and stable prices

Massive innovation in shale and other supply-side resources helped significantly to bring natural gas prices down, reduce volatility and assure long-term availability. Growing U.S. LNG capacity makes it the swing player in exports.

Improved price competitiveness and environmental

Advantages over other fossil fuels make natural gas an attractive option to fuel continued economic growth in developing countries.  The markets for gas are expanding globally, even as demand levels off in Europe and North America.

International integration

LNG trade is projected to double by 2035, with shorter, more flexible contracting terms.  Increased gas-on-gas competition will tie together what are now separate regional markets, transforming natural gas into a global commodity.

Customer-sited end-use innovation

Gas offers flexibility and unparalleled efficiency for most of its core industrial, commercial, and residential applications. For example, space and water heating applications of natural gas in residential and commercial sectors currently are the most efficient and cost-effective solutions in comparison to electrical technology alternatives.

Potential fit with renewables and energy storage

While traditional end uses were discussed at the conference, one of the biggest uncertainties is how gas fits in integrated energy solutions, and how those models differ around the world – due to alternatives, and to policy.

The green gas end game

Renewable gas from biogas production or power-to-gas cycles can serve core needs for intense energy applications and complement renewables in the low carbon future.  Biogas is already attracting high levels of investment in Europe and is increasingly price competitive.  Power-to-gas technologies are scaling up and could fill the large need for longer duration energy storage in the future energy system.

Thanks to innovation driven by entrepreneurs and US government R&D funding in hydraulic fracturing and new horizontal drilling techniques, the US led the shale revolution.  And now, natural gas is moving from a regional commodity used primarily for heating and electricity generation to global mover of energy markets.

We believe that the next similar breakthrough is in process and end-use efficiency of natural gas. This is already evidenced by DOE and utility funding flowing towards heat pumps, micro-CHP, other high efficiency technologies, as well as power-to-gas processes, and other complementary to renewables technologies. With a similar level of policy and financial support, gas can be an important contributor to meeting long term decarbonization goals and improving quality of life through the most cost-effective pathways.

Bill Kemp's World Gas Conference presentation