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Natural gas is becoming one of the most important resources of energy with its share in
the world consumption expected to increase as much as 50% by 2020. Currently, natural gas is
transported to the markets by pipelines and as liquefied natural gas (LNG). Transporting the natural gas by pipelines is convenient and economical for onshore purpose. For offshore transport of natural gas, pipelines become challenging as the water depth and the transporting distance increase. LNG, an effective mean of transporting gas for long distances overseas, constitutes 25% of the world gas movement. But LNG projects require large investments along with substantial natural gas reserves and are economically viable for distances longer than 3000 miles.

By : Asim Deshpande and Michael J. Economides, University of Houston.

Abstract

Natural gas is becoming one of the most
important resources of energy with its share in
the world consumption expected to increase as
much as 50% by 2020. Currently, natural gas is
transported to the markets by pipelines and as
liquefied natural gas (LNG). Transporting the
natural gas by pipelines is convenient and
economical for onshore purpose. For offshore
transport of natural gas, pipelines become
challenging as the water depth and the
transporting distance increase. LNG, an
effective mean of transporting gas for long
distances overseas, constitutes 25% of the world
gas movement. But LNG projects require large
investments along with substantial natural gas
reserves and are economically viable for
distances longer than 3000 miles.
Compressed natural gas (CNG)
technology provides an effective way for
shorter-distance transport of the gas. The
technology is aimed at monetizing offshore
reserves, which cannot be produced because of
unavailability of pipeline or because the LNG
option is very costly. Technically the
technology is easy to deploy with less
requirements for facilities and infrastructure.
Economically for distances up to 2500 miles
CNG can transport natural gas at prices ranging
from $0.93 to $2.23 per MMBTU compared to
LNG, which can cost anywhere from $1.5 to
$2.5 per MMBTU depending on the actual
distance. At distances above 2500 miles the cost
of delivering gas as CNG becomes essentially
the same as the LNG whereas the disparity in
the volumes of gas transported by the respective
technologies and market demands play the
deciding role for using the technology.

Introduction

Consumption of natural gas has been increasing
rapidly making it one of the most important
energy resources in the world. In 2002 the
consumption of natural gas was 89.5 Tcf
worldwide, an increase of about 3% since 2001.
During the last decade the consumption of
natural gas increased by almost 25%1. By 2020
natural gas is predicted to increase its world
energy share to as much as 50% from the
present of 22%2. Much of the increased
consumption is seen to be in the electric power
generation.

The lower carbon emissions compared to
oil and coal along with other reduced emissions
of nitrogen oxides and particulates make gas
environmentally attractive. More important is
that the cost of power generation using natural
gas is 50% less than using coal3. These factors
have led to future projections of increase of
annual consumption in power generation from
5.23 Tcf in 2000 to 9.39 Tcf in 2020, an
increase of 80%, in the U.S. alone4. Similar
trends are seen in the developing parts of the
world such as Southeast Asia.
This increased consumption of natural
gas along with the reduction of the market share
of existing sources such as coal and oil have
raised the specter of shortages in supply in the
United States and other nations. With the
emerging demand and with new market
opportunities expected to arise, the ways of
transporting the gas from offshore reserves and
overseas sources have generated considerable
and renewed interest.

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