The enormous reserves of natural gas in the United States have dramatically changed the global energy equation. The Potential Gas Committee (PGC) of the Colorado School of Mines recently published its report yielding the sixth consecutive record of natural gas resource assessment. U.S. natural gas consumption in 2014 totaled 27 trillion cubic feet (Tcf), yet the total volume of U.S. natural gas recoverable with existing technology in 2,853 Tcf - more than 100 times greater.
In addition, the U.S. Energy Information Administration's Annual Energy Outlook projects increased domestic natural gas production and stable prices for decades to come. While some continue to call for restrictions on liquefied natural gas (LNG) exports, these latest figures prove conclusively that America has an opportunity to reap historic, economic, geopolitical and environmental benefits from LNG exports, while continuing to fuel a manufacturing renaissance at home.
The markets are signaling the same message. Royal Dutch Shell announced its intention to acquire BG Group for $70. billion, with analysts calling the move primarily a bet on robust global trade in LNG. Further, even in an environment of tepid global oil prices, companies have maintained their efforts to gain approval from the Federal Energy Regulatory Commission (FERC) for LNG export facilities.
Five American terminals currently exist to import/export LNG: Everett LNG Terminal (1971), Dominion Cove Point LNG Terminal (1972), Elba Island LNG Terminal (1978), and the Trunkline LNG Terminal (2010). However, twelve new LNG export/import terminals have been approved by the FERC, with a further 22 projects proposed (as of June,2015). The effects of these terminals will have significant effect on global consumption due to the easing accessibility to America's LNG. One such terminal expanding America's LNG export, the Cheniere Sabine Pass Liquefaction Terminal, currently under construction in Louisiana, has an estimated cost in excess of $18 billion and a processing capacity of 3.58 bcf/day. This is the equivalent to 4.8% of America's daily natural gas consumption.
Domestically, EIA reports on average between 2015 and 2035 total American end-use electricity expenditures as a result of added exports, to increase between $5 billion to $10 billion (between 1 to 3%). And, with rapidly maturing LNG markets throughout Asia and Europe, total additional natural gas revenues to producers from exports are expected to increase on an average annual basis from 2015 to 2035 between $14 billion and $32 billion. However, should depressed energy prices negatively impact unconventional shale play natural gas production, EIA shows the greatest average annual increase in revenues over the 2015 to 2035 time period, with revenues ranging from over $19 billion to $43 billion.
One notable example of the useful, and profitable byproducts of natural gas is methanol. Methanol is one of the largest manufactured trading commodities after oil, and has about half the energy value of gasoline, but its high octane rating pushes this up to 70 percent. It is a liquid at room temperature and would therefore fit right into the global gasoline infrastructure, as opposed to compressed natural gas or electricity, which require new delivery systems. Utilizing current technologies, Methanol made from natural gas would sell for about $1 less per gallon than gasoline.
Most methanol fuel sold in America is sold as M85, a blend of 85% methanol with 15% unleaded premium gasoline. "Neat" (100%) methanol is a top contender as the near future's preferred means of storing hydrogen for fuel-cell electric vehicles, but this technology is still in the the research and development stage.
Car engines can burn methanol with a minor $200 adjustment that can be performed by any mechanic. One would have to fill up a little more often, but the savings on fuel are significant to the average consumer - about $600 a year. One notable disadvantage is that Methanol is more corrosive than gasoline, though it is less toxic and not carcinogenic. This is why automakers will need to change some of the materials that can withstand attack by the fuel. Special oil additives are necessary in order to protect the engine.
The EPA granted California an exemption during the 1990's that allowed 15,000 methanol-powered cars on the road. The experiment was a success and customers were happy but natural gas prices reached $11 MMBtu in 2005 and the program was cancelled. Almost immediately following cancellation, the fracking revolution brought down the price of natural gas. Natural gas currently sells at roughly $3 MMBtu.
In an effort to reduce rising pollution, Asian countries have taken up Methanol development. Japan's top four automotive companies are developing lines of methanol compatible cars. China has a million cars and numerous burning methanol on the road and wants to expand the numbers. In recent years, Texas and Louisiana have been hit with what is being called "Methanol Mania". Chinese companies are planning to build six major processing plants to turn the Gulf Coast into the world's largest center of methanol manufacture. The preponderance of this methanol is intended for transport to China primarily as feedstock for the plastics industry, and secondarily as automotive fuel. This will coincide with an expanded Panama Canal, which will be completed in 2016.
Today, methanol is produced in the U.S. for mostly non-fuel usage. There are eighteen U.S. methanol production plants, with a total annual capacity of over 2.6 billion gallons. Today most of the methanol in the U.S. is produced from natural gas and coal. New technologies utilized for the discovery, extraction, and application of natural gas are expanding existing domestic markets and generating new and highly profitable foreign opportunities.
* Institute of the Analysis of Global Security
* America's Natural Gas Alliance (ANGA)
* Energy Institute of America (EIA)
* Department of Energy
* Federal Energy Regulatory Commission (FERC)
* Fuel Freedom Association