CategoriesBlog, Compressed Natural Gas

The Growth of Natural Gas as an Energy Source

As we get deeper into the 21st century, the challenges confronting the energy industry worldwide continually grow in enormity, complexity, and urgency. Multiple concerns — from price volatility to adverse environmental effects and political instability of “traditional” producer nations — are directly shaping government policies, influencing business decisions, and driving attitudinal and behavioral changes among both suppliers and consumers alike.

Amid mounting pressures for more efficient energy consumption and conservation, better utilization of proven reserves, and greater exploration of renewable energy sources/alternative fuels, the fundamental dynamics of the energy industry worldwide are evolving.

A readily apparent change is the expanding number of applications of natural gas as an energy source — particularly as compared to other primary energy sources such as coal and crude oil/petroleum and its derivatives (e.g., gasoline/petrol, diesel, and propane/liquefied petroleum gas). In fact, today’s applications include everything from providing heat and electricity for businesses to serving as a chemical feedstock in the production of plastics, glass, steel, and commercially important compounds like ammonia.

CNG Takes Center Stage

When it comes to natural gas, one of the most significant trends involves the skyrocketing use of compressed natural gas (CNG) — natural gas that is compressed to less than 1% of the volume it occupies at standard atmospheric pressure — as a fuel for private automobiles, fleet vehicles that log high daily mileage (e.g., taxis, buses, and airport shuttles), and medium- and heavy-duty trucks. (CNG use by railroads as a locomotive fuel is gradually making inroads, too.)

In meeting the demand for CNG, manufacturers, distributors, and retailers must first and foremost ensure its safe road/rail/sea transport and on-site storage — while maintaining conformance with highly complex and stringent government regulations around the world.

The Expanding Range of Natural Gas Applications

Although natural gas is not as common an energy source as petroleum-based products, new applications are constantly being discovered. For example, within the industrial and power-generation sectors — among the primary users of natural gas — applications now include incineration, drying, food processing, and cogeneration (i.e., CHP, or combined heat and power).

Since natural gas occupies more volume than traditional liquid fuels, it is only practical as a portable fuel supply for shipment and delivery in its CNG or LNG (liquefied natural gas) form. However, the processing costs of generating and storing LNG are considerably higher than those for CNG and, as such, there are certain applications in which CNG is strongly preferred.

One case in point: CNG-based fueling systems are found in virtually all passenger vehicle applications and in more than 80% of all medium- and heavy-duty trucks and transit buses. Significantly, the market for natural gas vehicles (NGVs) continues to expand, particularly in Asia with 46% of the worldwide market, and in Latin America with 28%. (On a per-nation basis, the highest number of CNG-fueled vehicles can be found in Iran, Pakistan, Argentina, Brazil, and India.) In fact, the International Association of Natural Gas Vehicles estimates that today’s 14.8 million NGVs worldwide will increase to 65 million by 2020.

Factors Driving the Increased Use of Natural Gas

The rising popularity of natural gas worldwide can be attributed to several factors:

Lower cost than petroleum derivatives. Over the past 25 years, the price ratio of oil to natural
gas has been approximately 10x — with today’s oil-to-gas ratio skyrocketing to 40x. It’s been estimated that a vehicle using CNG can reduce annual fuel costs up to 40%, assuming 25,700 miles driven per year, gasoline priced at $3.50/gallon, and CNG priced at $2.09/gasoline gallon equivalent. This represents savings of as much as $1,500 per fleet vehicle per year.

Lower vehicle-related maintenance costs. Compared with gasoline- and diesel-powered vehicles, CNG-powered vehicles incur fewer maintenance expenses. As examples: Due to the absence of any lead or benzene content in CNG, there is no lead fouling of spark plugs; CNG fuel systems are sealed, which prevents any spill or evaporation losses; and, since CNG does not contaminate and dilute the crankcase oil, there is increased life of lubricating oils.

Fewer pollutants and the role of government. Under intense pressure to address environmental concerns, more and more governments worldwide are implementing “green” energy initiatives — with many such initiatives focusing on vehicle fuel. Specifically, compared to gasoline, CNG emits significantly fewer toxins like carbon dioxide, unburned hydrocarbons, carbon monoxide, and nitrogen oxides. Consider a collaboration between GE and Chesapeake Energy Corporation, which will provide over 250 modular and standardized CNG compression stations in the U.S. in autumn 2012: It’s estimated that for each fleet vehicle using CNG instead of gasoline, a fleet operator can reduce carbon dioxide emissions approximately 24% or 2.2 metric tons per vehicle annually, assuming an average fleet vehicle travels roughly 25,700 miles per year.

Mindful of such data, governments are motivating and/or forcing behavioral change through a variety of ways. For example, some countries have increased taxes on carbon emissions. Malaysia removed subsidies and caused gasoline prices to rise 41% in 2008, resulting in a 500% increase in the number of vehicular CNG-tank installations. And in India, there is an ever-growing number of mandates dictating conversion to CNG-powered vehicles — a highly feasible solution, given that virtually any existing gasoline automobile can be converted into a bi-fuel (i.e., gasoline/CNG) automobile.

The relationship between reduced risk exposure and available natural gas supply. Since a high percentage of crude oil/petroleum comes from politically unstable regions, there is a strong incentive among nations to reduce dependence on petroleum imports from those areas and seek other energy sources. When it comes to natural gas, this intensity of focus has generated encouraging results, with previously unknown reserves being discovered … and previously unexploited technologies being utilized. For example, although natural gas has historically been extracted from oil fields and natural gas fields, techniques like hydraulic fracturing (commonly known as fracking) are being leveraged to release unconventional natural gas through extraction from untapped deposits. As such, while coalbed methane is being extracted from coal beds, shale gas is being extracted from shale deposits, and tight gas from sandstone or limestone formations.

Due to these efforts to identify more natural gas resources, natural gas proven reserves worldwide in January 2012 totaled 300 trillion cubic meters (TCM) — up 71% from the January 2008 estimate of 175.5 TCM.

Posted by: FIBA Technologies

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