I have only a cursory knowledge of the natural gas market. I vaguely remember from my class on Economics of the Energy Industry that natural gas was different from crude oil, it’s obviously easy enough to export oil on a ship, so crude prices reflect a worldwide supply and demand. Bu, what about natural gas? I’ve always thought that was a market fairly localised.
Is there a process where natural gas can be exported without the use of a pipeline? My curiosity was piqued since natural gas prices have rocketed up lately.
Yes. LNG/ you liquefy natural gas by cooling it. 600 buckets of natural gas become one bucket when liquified. That one bucket is transported using LNG ships.
Your memory of natural gas economics was right. The introduction of the technology for economic LNG has been a total game changer for the natural gas industry. From being a local energy source only, and thus one priced based upon local economic forces and costs, it is now a worldwide energy commodity and traded and priced as such. Not everyone is exactly happy about this as its price has risen accordingly, and what was once a cheap way of providing heating in countries where natural gas was available has risen in price to be basically no cheaper than any other method.
About the only place LNG has a disadvantage is in remote or poor areas, where piping of gas from LNG storage isn’t feasible. Here LPG (butane/propane) remains the preferred option, as it stays liquid at ordinary temperatures and can be trucked about and stored easily.
Where I live, I’m just on the wrong side of the line of economically running piped gas. So I use LPG for cooking and some heating. When I moved here LPG was about double the price for a given amount of energy versus natural gas. The advent of LNG has steadily driven the price of natural gas up to the point where there is no important difference. Simply because natural gas is now priced as a commodity. Nothing local has changed at all. We get the natural gas from the same wells, and it comes down the same pipelines. But we are now in competition with a hungry international market that also wants and can now get that gas.
US has changed from a net importer to a net exporter of natural gas in about 2020. Mostly due to fracking. This effects oil related world politics.
Qatar has vast reserves of Natural Gas. So much so that they have invested billions of dollars in plants converting Natural gas to Oil / Gasoline. The relations between Saudi Arabia and Qatar were severely strained until recently, and many speculate it was because of natural gas.
Russia would cut off natural gas to some European countries during peak winter just as a bargaining chip.
Pipelines, yes. In Europe, they have become a highly politicised issue. Some Western European countries, such as Germany, are highly dependent on natural gas for both electricity production and residential heating. The bulk of that gas is imported from Russia, and the traditional transit countries through which it would be pumped are Ukraine, Belarus, and Poland. This has led to concerns that these countries might use this as a political bargaining chip, by threatening to disrupt supply; so Germany and Russia have collaborated to build, under the Nord Stream brand, several pipelines across the Baltic Sea to bypass the traditional transit countries. This was opposed by the European Commission and the United States, which has led to a deterioration of relations between those and Germany. Applied geopolitics.
There are a lot of LNG terminals being built in the states bordering the Baltic to reduce the dependency on pipelines carrying NG from Russia. LNG tankers arriving from the US sends a diplomatic message in the international poker game.
Russia is also building an LNG Terminal to export its gas further afield. So it works both ways.
I am a bit curious regarding how much the biggest tankers can carry compared to a countries daily consumption. The UK gets about 7% of its gas as LNG, the rest comes by pipeline from the Norwegian North Sea field and a bit from the UK field.
The other factor is how much you can store in case supplies are interrupted. Or the prices go sky high, which is certainly the case now. If there is a cold winter in Northern Europe, this will become big political issue.
LNG is currently several times the normal cost, I guess big resource poor economies like China is buying it all.
Pipelines carry millions of dollars worth oil and gas every say. Money flowing from one country to another. It explains a great deal about what is going on behind the scenes in geopolitics. For many resource poor countries, the next energy crisis is always just around the corner. Gas keeps the power stations humming.
Russia built the massive Yamal LNG plant on its northern Siberia coast. It is going to produce about 16 million tonnes of LNG a year and they have 16 ice breaker capable LNG tankers built or in construction so they can get it out all year round. They have 3 LNG production trains and may put in a 4th. The very cold weather
Global production is about 360 million tonnes and Qatar is at about 75 and plans to ramp up to 110 by 2040. Many gas producing countries are going for LNG over pipelines as it gives them far more options as to where they can sell it and it give the options to get better prices even if the over all cost is a little higher.
The vessels can also act as a storage buffer to allow some more optimal market timing for the sale.
One slightly cool feature of LNG is the decompression trains could be co located with industry needing cryogenics, as the gas expanding makes stuff fairly chilly. Not sure how many places are doing it though.