NEWS WRAP-UP: Natural Gas Gains Ground on Land & Sea

Posted by Lexie Briggs on May 17, 2013 11:23:00 AM

Liquified Natural Gas AEENatural gas is now one of our most abundant fuel sources, and it’s cleaner burning than other fossil fuels, making it a natural for advanced energy applications like high-efficiency electricity generation and even transportation. Energy companies worldwide are working to develop infrastructure for transporting the fuel from producer to consumer, often in the form of LNG. 

In its gaseous state, distribution of natural gas is limited by the network of pipelines, which makes markets for natural gas more local and regional in nature than those of other fuels. By liquefying it, natural gas can be made into a portable fuel and taken to market wherever it is needed – and the price is right.

There are currently a dozen LNG terminals in the U.S., mostly in the Gulf of Mexico and along the East Coast, as well as two in Mexico and one in New Brunswick, Canada. These were built to bring in LNG from abroad. But now the U.S. is poised to become a major LNG exporter. The U.S. Department of Energy is currently reviewing 20 applications for exporting natural gas to countries without free-trade agreements.

Although the Department has yet to rule, Moody’s predicted this week that DOE will approve three LNG export proposals, despite a push from some manufacturers to restrict exports to keep domestic prices low. Moody’s expects that American export capacity will grow to 6 billion cubic feet of natural gas per day, or 9 percent of domestic production, by 2020.  At the Bloomberg New Energy Finance Summit, former Colorado Gov. Bill Richardson pointed out that American LNG exports are good trade policy.

Among the major oil companies, Shell, in particular, has been investing heavily in LNG – and it has been paying off. Shell has built about $40 billion in LNG infrastructure already, and LNG accounted for over 35 percent of Shell’s profits last year.  “We are in the lead, and we want to stay in the lead,” said Andrew Brown, head of international exploration and production for Shell. Shell projects the LNG market will grow rapidly over the next decade, doubling by 2025.

One innovation Shell is pushing is floating liquefied natural gas import facilities and liquefaction plants. With liquefaction done on barges and the LNG re-gasified by the tanker at floating terminals and put into pipelines, the high costs of onshore plants and storage facilities will be avoided.  This will also allow for more rapid development of LNG markets in developing countries.  (Two such LNG import terminals off the coast of Massachusetts are operational, but have been largely idle as domestic natural gas supply has soared. The resulting steep price declines in domestic prices have led LNG to go elsewhere, especially Japan, where prices are much higher.) 

“Floating natural gas infrastructure has really been embraced by the industry, and it has been embraced for some really great reasons,” Kathleen Eisbrenner, CEO of Pangea LNG, said. She estimates that half of all countries will use floating infrastructure as part of their fueling infrastructure within the next ten years.

Natural gas as a transportation fuel – compressed (CNG) and liquefied – is also booming, as America’s Natural Gas Highway continues to develop and natural gas refueling stations spring up across America. UPS has announced that it will be adding 700 natural gas vehicles to its fleet. The Motley Fool proclaimed that natural gas vehicles “hold tremendous promise” for the U.S. (At the same time, news broke this week of a natural gas van company closing its doors.  The company, Vehicle Production Group, which specialized in natural gas-powered vans for disabled consumers, has not declared bankruptcy, but it has shut down production and laid off its staff.)

And recently, a major oil company announced it would develop a network of LNG filling stations at TravelCenters of America (TA) truck stops across the country. Which oil giant? Shell, of course.

In other news, the New Yorker featured AEE member company and advanced wind turbine startup Makani. Tying co-founder and interim CEO Don Montague’s background in kite surfing to Makani’s strategy of harvesting high-altitude wind energy, the article features the company’s newest prototype, the Wing 7.

In this week’s Tesla update – it seems like every week, anyway – the Model S earned a jaw-dropping score of 99 from Consumer Reports, the highest rating given by the magazine since 2007. “It [outscores others] even though it’s an electric car,” wrote Consumer Reports. “In fact, it does so because it’s electric.” The luxury EV maker also announced plans to issue new stock (with CEO Elon Musk vowing to buy $100 million worth of the new shares himself) and make a bond offering to raise $850 million, part of which would be used to pay off early its $465 million loan from the Department of Energy.

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Topics: News Update