Natural Gas: from Scarcity to Abundance – Part One

Apart from North America, the use of natural gas as a fuel within the cement industry is confined to countries where natural gas is a government-subsidised fuel, or to locations where a plant is situated close to cheap natural gas resources. Natural gas prices in North America have been gradually declining, primarily due to advances in shale gas extraction techniques. A recent comparison of coal and natural gas prices in the United States (during summer) revealed that the price of gas-fired energy currently stands at around US$0.02 or e0.016/kWh, nearly half the price paid by many coal-fired plants, which typically require more capital investment, labour and housekeeping than gas-fired plants.¹

The price of coal has tumbled to about 40% of its pre-recession peak. Natural gas, after falling 40% along with coal, has fallen even further to around 25% of its pre-recession peak in North America. Oil followed a similar trend until the end of 2009 when the price began to creep up, finally touching near pre-recession values. This is because half of oil utilisation remains in the transport sector, which has not been so badly affected by the slow down, mainly displaying normal supply and demand fluctuations.

Coal is the world’s most abundant fuel. Nevertheless, its price on the international market is dependent on oil and gas prices. Natural gas supply, unlike coal and oil, is restricted by existing pipeline networks, reflected in its abundance in some countries and scarcity in others. Take Egypt, for example, where heavy industry is struggling to meet its energy demand via natural gas. Some cement plants are operating at 75% capacity and are seeking to switch to coal and/or co-firing alternative fuels to make up the deficit.² Some Asian countries such as India and Pakistan are trying to tap into the vast natural gas resources of Iran and former Soviet Union states. In North America, natural gas is in abundance owing to more and more shale gas extraction. Some countries, including China and the UK, have aggressively begun to replicate the North American success. Others, meanwhile, such as France, the Netherlands and Germany, view the shale gas extraction techniques with reservation and concern due to the possible environmental and geological impacts, notably contamination of aquifers and disturbance of the tectonic plates in the earth’s lithosphere, posing an earthquake risk. The European Commission is hoping to finalise a fracking risk-management strategy next year, but it will be some 3 – 5 years before debutant countries are able to tap into their large deposits of natural gas trapped in shale pockets several hundred metres below the earth’s surface.

Another source of natural gas, called ‘ice gas’ (methane hydrates), has been successfully extracted from frozen methane hydrate within the territorial waters of Japan in the world’s first large-scale exploration of the technology.² Methane hydrates, or clathrates, are essentially a frozen ‘cage’ of molecules of methane and water. Researchers say it could provide an alternative energy source for Japan, which currently imports all its energy needs. Other countries, including Canada, the US and China, have been looking into ways of exploiting methane hydrate deposits.

References/notes

1. SMITH, R., ‘Continuing mothballing of coal-fired plants’, Wall Street Journal, European Edition, 11 September 2012.
2. http://www.aggregateresearch.com/articles/28423/Natural-gas-shortage-in-Egypt-hits-cement-production.aspx

Written by T. Abbas. This is the first part of a three-part article, originally published with additional Figures in the November 2013 issue of World Cement. To see the article in its entirety, subscribers can sign in here.

To read part two of this article, click here

Read the article online at: https://www.worldcement.com/the-americas/30122013/natural_gas_from_scarcity_to_abundance_part_one_6/