Study: Oil & Gas Natural Gas Could Gradually Replace Crude Oil

Editor: Dominik Stephan

With crude oil reserves depleting and declining margins, the oil and gas industry eyes for alternatives. Natural gas, long–term poor cousin of the crude oil business, could bring a change, but is held back by the necessary infrastructure efforts it requires. Now the discovery of new gas fields in vicinity to the booming markets of Asia–Pacific fires the imaginations of oil and gas experts...

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Is the age of oil coming to an end? Recent figures indicate alarming low reserves-production ratios for developed nations such as the United States and Canada. The seemingly endless oil resources in the Middle East deplete rapidly. There is widespread concern over what alternative fuel could replace crude oil based products in the future, as a new report by GBI Research shows. Although natural gas was not considered a utility in crude oil production’s glory days, the depletion of conventional crude oil reserves and regulatory emissions charges have started shifting consumption towards cleaner and more plentiful natural gas, GBI believes.

Storage and Handling of Natural Gas Poses Challenges

Now the industry eyes alternative sources of natural gas: New advancements in technologies such as LNG infrastructure and processes such as the liquefaction and regasification have expanded gas’s possible uses. This development is accompanied by successes in exploration evidenced by an abundance of freshly-found reserves.

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Currently, the storage and transport of gas still somewhat limits the market penetration, as do infrastructural limitations in logistics and transportation, that cause variations in natural gas prices across various regions. While an effective transportation infrastructure has been in place to transport crude oil for many years, this has not been the case with natural gas, which relies extensively upon liquefaction and regasification when faced with insufficient pipeline infrastructure.

Despite struggling oil markets in Europe and the US, rthe siituation in Asia is different - Want to learn more? Read Refinery Markets Boom in Asia–Pacific

The Offshore Industry Banks On Liquefied Natural Gas

But also traditional gas pipelines hold limitations in regards to terrain and distance. For this reason, especially offshore gas productions and logistics via the LNG method provide a simpler and more efficient process for cross-continental transport, but can be a cost-intensive operation owing to expensive logistics and tanker construction, GBI states.

Now the natural gas industry expects additional stimulation from the discovery of gas fields in offshore Western Australian waters. Especially the close proximity of the resources to emerging economies in the Asia Pacific have boosted the LNG markets.

Australia to Become the Number One in Liquefied Gases?

GBI believes that the huge consumer base in Asia–Pacific, rapidly increasing demand and short distance to end-use markets make these new gas findings perfectly placed. Australia could thereby easily become the leading producer of LNGs until 2017, the analysts expect. Energy giants such as Royal Dutch Shell are planning to build liquefaction terminals on Western Australian shores to feed both the domestic markets and nations, such as China, India and Taiwan, demonstrating its financial commitment to the newly discovered reserves.

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Depleting Crude Oil Reserves Drive Natural Gas Industry

The shift towards new fossil energy sources is, nevertheless, continuing only gradually, as global economies have long been accustomed to utilizing crude oil. A total shift would happen only over decades, and demand the extensive rejuvenation and revamping of fuel consumption infrastructure, GBI specialist underline. However, natural gas is still anticipated to emerge as a promising commodity over the coming years.Discover, why shale gas booms in the US and how this effects the chemical industry in the first part of our series "Chemical Industry of the Americas"!