Over the last two decades, the global natural gas market has changed dramatically. Several trends are currently influencing the natural gas industry's prospects. The natural gas, which is generally considered as a bridge fuel toward a low-carbon energy system, burns cleaner than oil or coal for electricity generation, its usage has increased across all economic sectors in recent decades. With the advent of technologies to Liquefied natural gas (to LNG) for transportation, the switch to natural gas is becoming more prevalent. The use of gas is increasing in all sectors, including power, industrial, petrochemistry, and transportation. In China's air pollution current situation, the Chinese government has been promoting natural gas by expanding pipelines and proposing new applications. The Chinese government is taking steps and collaborating with the natural gas industry to expand natural gas usage in their market. Other trends for natural gas production and distribution include real estate development, which has increased the number of residential gas customers and migration to this energy source, as well as power plants increasing their natural gas use. In 2020, the United States consumed 30.5 trillion cubic feet (Tcf) of natural gas, equivalent to 31.5 quadrillion British thermal units (Btu), and accounted for 34% of total energy consumption. With a growing global population and continuous demand for oil and gas products, the availability of supplies will be determined by the discovery of new resources and advancements in production technologies. In addition, the advent of new technologies such as Gas to Liquid (GTL) and Compressed Natural Gas (CNG) are expected to unlock further gas demand in the future.
Gas to Liquid (GTL)
Gas to Liquid is a method of producing various chain hydrocarbons from natural gas used in refineries. The refinery process uses numerous equipment to burn natural gas to produce a variety of goods such as motor oils, transportation fuels, and others. Direct partial combustion of methane to methanol and Fischer–Tropsch-like reactions that convert carbon monoxide and hydrogen into hydrocarbons are the two main techniques. Economic gas to liquid has brought up a plethora of new possibilities. Oil, gas, and petrochemical firms will discover many more as they examine their own project lists and strategy. In this context, gas to liquid is a new tool with a wide range of applications that will have an impact on investment decisions from exploration to downstream
When there is a large difference between the current natural gas price and the crude oil price on a barrel of oil equivalent (BOE) basis, Gas to Liquid (GTL) using natural gas is more cost-effective. Full oil parity is achieved with a coefficient of 0.1724. In a rising worldwide natural gas output at a lower price than crude oil, gas to liquid is a method to bring down international diesel/gasoline/crude oil prices to parity with natural gas costs. When natural gas is converted to GTL, the liquid products are easier to export at a lower cost than when natural gas is converted to LNG and then converted to liquid products in an importing country. Therefore, owing to the aforementioned factors gas to liquid technology is gaining popularity.
In addition, various industry participants are expressing an interest in collaborating on research and development to broaden the reach of a diverse range of products across a variety of sectors. The R&D initiatives also aim to improve the technological components of the production methods in order to increase efficiency while reducing the amount of unusable fuel oil produced. For instance, in March 2020, INFRA Synthetic Fuels Inc., a subsidiary of INFRA GTL Technology in the United States, announced a U$100 million investment in collaboration with Gas Technologies LLC to expand its R&D and technology development operations. The goal of the collaboration is to build an integrated gas to a liquid production system that can convert natural gas and renewable gas sources into commercial-grade methanol, ultra-low sulfur diesel (USLD), naphtha, and low-carbon renewable fuels. The introduction of such technology will further create opportunities for the GTL industry.
The establishment of strict environmental rules by many countries to limit pollution and encourage cleaner fuel sources is also likely to support the growth of the gas to liquid business. The Petroleum and Natural Gas Regulatory Board Act of 2006, the Oilfields (Regulation and Development) Act of 1948, and the Oil Industry (Development) Act of 1974 are supporting gas to liquid (GTL) use across a variety of end-use industries to save natural gas and other resources. Several companies are increasingly using Gas to Liquid services to produce synthetic, "green" fuels. According to the World Bank, about 150 billion m3 of flare gas is recovered each year, which may be simply converted into convenient synthetic fuel utilizing the method. These factors are also expected to enhance demand in natural gas-rich countries. The high cost of setting up gas to liquids facilities, as well as the size limits of slurry-based and stationary reactors, are the key market restraints. However, as natural gas consumption rises, particularly in countries like India, Japan, and China, the use of small-scale micro-channel reactors in place of conventional reactors may provide prospects for the gas to liquids business.
Compressed Natural Gas (CNG)
Compressed natural gas is a fuel gas made primarily of methane (CH4) that has been compressed to less than 1% of its original volume at regular atmospheric pressure. It's kept and delivered in rigid containers with a pressure of 20–25 MPa, commonly in cylindrical or spherical shapes, at a pressure of 20–25 MPa. Compressed natural gas (CNG) is utilised in vehicles with modified classic petrol/internal combustion engines or vehicles specifically engineered for compressed natural gas use, either alone, with a segregated liquid fuel system to extend range, or in combination with another fuel. It can be substituted for gasoline, diesel fuel, and liquefied petroleum gas (LPG).
Natural gas is less dangerous than other fuels in the event of a leak since it is lighter than air and disperses quickly when discharged. It's possible to use biomethane, which is purified biogas from anaerobic digestion or landfills. The compressed natural gas (CNG) demand is increasing owing to its affordability and environmental friendliness. With the rise in environmental challenges such as climate change and ozone layer depletion, several countries throughout the world have begun to use compressed natural gas for power generation. Many countries prefer compressed natural gas because of its low cost due to rising oil prices. Furthermore, as various countries' energy needs expand, non-conventional fuels such as compressed natural gas demand are increasing. In addition, the compressed natural gas industry is fuelled by strict government rules in pollution control and an improvement in the financial condition of several countries throughout the world. Though the initial investment cost is prohibitively high, the installation and costs of compressed natural gas storage tanks in automobiles are prohibitively expensive, and the market's expansion is hampered by a scarcity of fuelling stations.
According to a recent study conducted by the Sustainable Gas Institute in 2019, emissions from natural gas-fuelled vehicles are 15% lower than those from diesel trucks. In regions where there is a large difference in fuel prices, the International Energy Agency (IEA) estimates a payback period of two to four years. In some countries, the cost of establishing refueling infrastructure is subsidized, which may lead to the emergence of more gas stations, and, as a result, more people preferring to buy or use compressed natural gas vehicles. In addition, because it is one of the cleanest transportation fuels, various government efforts and plans have been developed to promote its use even further. In April 2016, various countries agreed to sign the Paris Agreement, which was preceded by the United Nations Framework Convention on Climate Change's 21st Conference (COP 21) at the end of 2015. One hundred and seventy-five countries, including China, the United Kingdom, the United States, Russia, France, and others, have already signed the Paris Protocol, confirming the importance of environmental and climate challenges.
Automakers have recognized this as a compelling proposition and are introducing automobiles with compressed natural gas systems as standard equipment. Customers also prefer this setup because the new vehicle is protected by a warranty and can be serviced at approved locations. Compressed natural gas vehicles also have cheaper maintenance costs than conventional ICE (Internal combustion engine) vehicles in some circumstances. For example, 12-month research comparing CNG and diesel transit buses found that gas-fueled buses are 12 percent less expensive to maintain than diesel buses.
However, the high cost and inconvenient placement of fuel storage containers is a major impediment to CNG's wider and faster adoption. It's also why governments and public transit vehicles were among the first to use it, as they can quickly recoup their investment in the new fuel. Despite these obstacles, the number of CNG-powered vehicles on the road has continuously increased around the world. The cost of such fuel storage cylinders has now been brought down to a far more reasonable level as a result of the industry's continual growth. Several countries, especially in the case of CNG cylinders, are capable of producing reliable and cost-effective cylinders for conversion demands.
Another impediment to compressed natural gas vehicle penetration is the lack of harmonized rules and standards across foreign jurisdictions. An active technical committee of the International Organization for Standardization is working on a norm for natural gas automotive fuelling stations. Natural gas vehicles have a great global safety record, despite the lack of unified international rules. ISO 14469-2:2007, which relates to compressed natural gas vehicle nozzles and receptacles, and ISO 15500-9:2012, which provides tests and criteria for the pressure regulator, are two existing international standards. The NFPA 52 code, developed by the National Fire Protection Association, governs natural gas vehicle safety in the United States.
Compressed Natural Gas (CNG) Outlook: By Region
For more than 20 years, natural gas has been used as a vehicular fuel in Canada. Since the 1980s, with the assistance of federal and provincial research programs, demonstration projects, and natural gas vehicle market deployment initiatives, the population of light-duty natural gas vehicles has been steadily increasing. Since 1980, the US has also undertaken several natural gas vehicle projects and programs, similar to Canada, but has had minimal success in maintaining the market. However, federal tax credits are available in the United States for the purchase of a new CNG vehicle. In Texas, Railroad Commissioner David Porter launched the Texas Natural Gas Initiative in October 2013 to promote the use of natural gas fuel in transportation, exploration, and production. Texas is quickly establishing itself as a national leader in natural gas infrastructure. For instance, according to IEA, in 2021, Texas opened 93 natural gas fueling stations. The pace of CNG vehicle penetration is projected to remain unchanged in the region.
Myanmar's Ministry of Transport established a rule in 2005 requiring all public transportation vehicles, including buses, trucks, and taxis, to be converted to run on compressed natural gas (CNG). Several private companies were given permission by the government to handle the conversion of existing diesel and petrol cars, as well as to begin importing compressed natural gas (CNG) buses and taxis. Accidents and rumours’ of accidents have deterred locals from using CNG cars, despite the fact that CNG is currently used by practically every taxi and public bus in Yangon, Myanmar's largest city.
Furthermore, the CNG vehicle penetration in countries such as India and China are also on pace. For instance, Gujarat, India's western state, had 636 compressed natural gas (CNG) stations as of April 2020, making it the state with the most CNG stations. According to the Minister of Petroleum, Natural Gas, and Steel, the number of CNG stations in India has increased from 947 to over 2,200 in the last six years.
Primary energy consumption is predicted to nearly double to 1,123 million tonnes of oil equivalent by 2040, according to the IEA's India Energy Outlook 2021. India's natural gas production grew by 22.7 percent year on year in April 2021, according to government data, as Reliance Industries Ltd. and its partner, BP plc, expanded production in the KG-D6 block on the east coast. In addition, to satisfy increased demand, Petronet LNG stated in February 2021 that it will raise the capacity of its Dahej terminal by 29 percent to 22.5 million tonnes per annum (mtpa). ONGC announced in February 2021 that natural gas output from a KG basin block would be increased to 2.5-3 million standard cubic meters per day by May 2021. The government launched key oil and gas projects in Assam in February 2021, including the INDMAX Unit at Indian Oil's Bongaigaon Refinery, Oil India Limited's secondary tank farm at Madhuban, Dibrugarh, and a "Gas Compressor Station" at Hebeda Village, Makum, and Tinsukia, which are all remote from Dhemaji. The Ramanathapuram Thoothukudi natural gas pipeline and the Gasoline Desulphurization Unit at Chennai Petroleum Corporation Limited, Manali, were both launched in February 2021 by the government. In February 2021, IndianOil Corp. Ltd. and Greenstat Hydrogen India Pvt. Ltd. inked a ‘statement of intent' to develop a center of excellence for the hydrogen value chain and related technologies such as hydrogen storage, fuel cells, and so on. Dharmendra Pradhan, the Union Minister of Petroleum, Natural Gas, and Steel, indicated that the central government plans to invest $60 billion in India's gas infrastructure by 2024, which will involve the construction of gas pipelines and LNG facilities. Therefore, from the aforementioned initiatives natural gas industry trends in the country is visible.
Compressed natural gas (CNG) is a relatively new fuel in Belgium. At the start of 2015, Belgium had 29 refuelling stations, all of which were in Flanders. As of January 2017, Belgium had 76 active refueling stations, the majority of which are in Flanders, with only 7 in Wallonia or BrusselsCNG offers a favorable fiscal status as fuel when compared to gasoline, with cheaper excise costs. CNG cars do not pay a premium road charge to partially compensate the State for the loss of revenue because CNG is not totally free from excise duties as motor fuel. Instead, because LPG is exempt from excise duties, LPG cars must pay a premium road tax in Belgium. Because compressed natural gas is not completely exempt from excise duties, it is legal in Belgium to connect a car to a natural gas home network and refuel it from there. In Belgium, Fiat and Volkswagen sell factory-equipped CNG vehicles. In Belgium, there were 11,188 CNG-powered vehicles by the end of 2018.
By 2020, CNG-powered vehicles are estimated to account for two million units of motor transportation in Germany. When compared to other fossil fuels in Europe, CNG fuel costs 1/3 to 1/2 as much. In 2016, Germany had over 900 CNG stations, and major German automobile manufacturers such as Volkswagen, Mercedes, Opel, and Audi provide CNG engines on the majority of their models.
Compressed natural gas (CNG) vehicles are widely employed in South America, where they are mostly used as taxicabs in Argentina and Brazil's major cities. Standard gasoline vehicles are typically converted at specialized shops, which includes installing the gas cylinder in the trunk, as well as the CNG injection system and electronics. The two countries with the greatest fleets of CNG automobiles are Argentina and Brazil. A significant price gap with liquid fuels, locally produced conversion equipment and a rising CNG-delivery infrastructure have all aided conversion.
Middle East & Africa
Iran has one of the world’s largest compressed natural gas vehicle, fleets and distribution networks. In Iran, there are more than 3.5 million compressed natural gas (CNG)-powered automobiles. The transportation sector in Iran consumes over 20 million cubic metres of CNG every day. In addition, in Nigeria, around seven CNG stations have been established in Benin City, Edo State, as of June 2020, with approximately 7,500 cars running on CNG in Benin City, Edo State. Coca-Cola, 7up, and Yongxing Steel all use CNG to power their forklifts or trucks, and Edo City Transport Ltd (ECTS) uses CNG to power some of its buses.
As a result of rising oil prices, environmental restrictions, and tariffs, the adoption of CNG vehicles is increasing globally across all sectors. The trend is projected to continue in the future years, given the ample supply of natural gas.
Covid-19 impact on Natural Gas Industry
The sudden spread of the severe acute respiratory syndrome coronavirus has triggered a medical emergency in all countries throughout the world. Several countries placed strong limitations on the spread of a highly dangerous virus. Administrative measures such as national lockdowns and social distancing programs have brought the situation to a halt. For instance, the International Energy Agency (IEA) reported in April 2020 that worldwide energy demand fell by -3.8 percent in the first quarter of 2020. According to International Energy Agency, the Covid-19 crisis will have a longer-term impact on natural gas markets because the main medium-term drivers are highly uncertain.
COVID 19 had thrown the entire ecosystem to a halt, putting a halt to the production and sale of new autos around the world. OEMs waited for the lockdowns to be released before they could resume production, which had a negative impact on their operations. As a result, automakers had to modify their manufacturing volumes. The automotive sector is a high-capital-intensive industry that requires periodic funding to stay afloat. As a result, the production halt and lower demand during the outbreak had an extraordinary impact on CNG vehicle makers as well.
After 2021, the majority of the demand growth is expected to occur in emerging countries of Asia Pacific, headed by China and India, where gas receives substantial policy support. In both countries, the industrial sector is the primary source of demand growth, making it extremely reliant on the rate of recovery in domestic and export markets for industrial goods. By 2025, the consequences of the Covid-19 crisis are expected to result in a loss of 75 billion cubic meters of yearly demand, which is the same amount as the growth in world demand in 2019.
However, new production and infrastructure projects are anticipated to come online while growth trends fall short of projections, bolstering the likelihood of overcapacity and low prices. This throws a pall over future investments, which will be required to maintain the renewal of production sources and global supply security in the long run.
The abundance of natural gas sources, as well as its cheaper cost as compared to other fossil fuel types, are boosting demand for natural gas from a variety of end-use sectors, including power generation. Furthermore the advent of new technologies such as gas to liquid (GTL) are further bolstering natural gas industry. Natural gas is a popular alternative fuel because of its established distribution networks, easy domestic availability, low cost, and minimal emissions. Due to the significant increase in gasoline prices in several nations, vehicle fleet managers and individuals are looking for alternative fuel for their vehicles. According to the Alternative Fuels Data Center (AFDC), the United States imported 3% of its petroleum needs from other nations in 2019. The country's transportation industry accounts for 30% of overall energy needs and 70% of petroleum usage. Natural gas as an alternative fuel, combined with innovative technologies, helps to strengthen national energy security while also lowering transportation energy costs for consumers and businesses. Because natural gas does not react with metals and is less corrosive than diesel, it lowers total maintenance expenses. Furthermore, several heavy-duty natural gas vehicles can travel one million miles or more without needing to be serviced. Furthermore, global warming has now become a big issue all around the world, and the public has begun to recognize its consequences. As a result, there is a growing anti-gasoline and anti-diesel sentiment. Some regions' emission standards have become so stringent that making automobiles comply requires significant investment. Strict emission regulations in some regions have resulted in significant investments to make vehicles compliant. This has put a lot of financial pressure on carmakers, especially diesel, and has acted as a key driver for the compressed natural gas market. The rising usage of alternative fuel in the automotive sector for cost-effectiveness, fuel efficiency, and pollution control can be ascribed to the expansion of automotive CNG. CNG vehicles are fast increasing in popularity in emerging countries, owing to CNG's reduced cost compared to rising petroleum costs. Furthermore, CNG vehicles are seen as a greener alternative to automobiles that run on petroleum. One of the most essential aspects of natural gas vehicles is their driving range, which is significantly less than that of petrol and diesel vehicles. Because natural gas has a lower energy density, this is the case. One liter of gasoline or 1.1 liters of diesel is about equivalent to one meter-cube of natural gas. As a result, natural gas is compressed and utilized in vehicles as compressed natural gas (CNG), which helps to mitigate the problem. The lack of refueling stations could further stymie their adoption. The presence of plentiful natural gas sources can considerably enhance feed intake, hence increasing product output for consumption. For example, Saudi Arabia's Energy Minister revealed in December 2020 that Saudi Aramco's wells had discovered four new oil and gas deposits. The finds, according to the ministry, are spread across the kingdom and contain huge amounts of natural gas and crude oil.
Mr. Venkat Reddy
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