natural gas assignment

7/21/2019 Natural Gas Assignment

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Objectives

To understand about natural gas scope and its importance in worldwide market

To have a better understanding about usage of natural gas in other countries

To learn about production rate of natural gas by different countries and their prices

Introduction

Natural gas might be considered as an uninteresting gas as it is colorless,shapeless, and odorless in its pure form. It made up of 70-90% of methane, 0-20% ofethane, propane and butane, 0-8% of carbon dioxide, 0-0.2% of oxygen, 0-5% ofnitrogen, 0-5% of hydrogen sulphide and traces of rare gases. Natural gas is a fossilfuel formed when layers of buried plants and animals are exposed to intense heat andpressure over thousands of years. The energy that the plants and animals originally

obtained from the sun is stored in the form of carbon in natural gas. Initially, wells aredrilled into the ground to remove the natural gas. After the natural gas is extracted, it istreated at gas plants to remove impurities such as hydrogen sulfide, helium, carbondioxide, hydrocarbons, and moisture.

As with other energy commodities, reserves of natural gas often do not lie nearmajor centre of demand, resulting in international trade. Around 30 per cent of naturalgas produced is internationally traded which is much lower than for crude oil, which hasaround two-thirds of production traded, reflecting the greater difficulties in transportinggas. However, natural gas is traded more than coal, which had only around 15 per centof production internationally traded in 2010. There are two main technologies for

transporting and trading natural gas pipelines, where gas is transmitted under highpressure through steel pipes and LNG, where gas is cooled to a liquid at minus160 degrees Celsius in large trains, reducing its volume by more than 600 times fortransport in specialized tankers. International pipeline trade is around twice the size ofLNG trade.

However, LNG is more economic than pipelines over long distances, particularlyacross oceans. Accordingly, it is used to bring production to market from remote orstranded gas fields, provides pipeline customers with alternative supply options fromfurther afield, and is particularly useful in servicing coastal population centre. In theunlikely event of an LNG spill, the natural gas has little chance of igniting an explosion.

Liquification removes oxygen, carbon dioxide, sulfur, and water from the natural gas,resulting in LNG that is almost pure methane. LNG is typically transported byspecialized tanker with insulated walls, and is kept in liquid form by auto refrigeration, aprocess in which the LNG is kept at its boiling point, so that any heat additions arecountered by the energy lost from LNG vapor that is vented out of storage and used topower the vessel.


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Natural gas is the cleanest of fossil fuels and been used widely for homes andindustrial activities. It emits fewer pollutants than other resources such as coal or oil andproduces very low ash particles after combustion. Natural gas been used widely inapplications such as in the production of steel, glass, ceramics and even electricitygeneration as well. One of the main reason is it is cost effective and cheaper than other

petroleum-based energy sources. In electricity production, there are several methodswhere natural gas is used to produce electricity. One method is to burn the gas in aboiler to produce steam, which is then used by a steam turbine to generate electricity. Amore common approach is to burn the gas in a combustion turbine to generateelectricity. However, there is another method which is getting popular where natural gasused in a combustion turbine and uses the hot combustion turbine exhaust to makesteam to drive a steam turbine. This technology is called "combined cycle" and achievesa higher efficiency by using the same fuel source twice.

Even though natural gas is a good source of non-renewable energy, but it stillbrings environmental impacts. For an example, burning of natural gas at a power plant

producesnitrogen oxides andcarbon dioxide, but in lower quantities thanburningcoal oroil. Methane, a primary component of natural gas and a greenhousegas, can also be emitted into the air when natural gas is not burned completely.Similarly, methane can be emitted as the result of leaks and losses duringtransportation. Emissions ofsulfur dioxide andmercury compounds from burningnatural gas are negligible. The average emissions rates in the United States fromnatural gas-fired generation are: 1135 lbs/MWh of carbon dioxide, 0.1 lbs/MWh of sulfurdioxide, and 1.7 lbs/MWh of nitrogen oxides. Compared to the average air emissionsfrom coal-fired generation, natural gas produces half as much carbon dioxide, less thana third as much nitrogen oxides, and one percent as much sulfur oxides at the powerplant.

In addition, the process of extraction, treatment, and transport of the natural gas

to the power plant generates additional emissions.

Natural Gas price and scope of Malaysia

Malaysia is the second largest oil and natural gas producer in Southeast Asia, thesecond largest exporter of liquefied natural gas globally, and is strategically locatedamid important routes for seaborne energy trade.
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According to the OGJ, Malaysia had 83 trillion cubic feet (Tcf) of proven natural

gas reserves as of January 2013, and it was the third largest natural gas reservesholder in the Asia-Pacific region. Over half of the country's natural gas reserves are in

its eastern areas, predominantly offshore Sarawak. Most of Malaysia's gas reserves areassociated with oil basins, although Sarawak and Sabah have an increasing amount ofnon-associated gas reserves that offset some of the declines from mature oil and gasbasins offshore Peninsular Malaysia.


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Oil and natural gas are the main primary energy sources consumed in Malaysia,with shares of 39 percent and 37 percent, respectively in 2011. About 18 percent of thecountrys energy consumption is met by coal. Biomass and waste make up another 4

percent, and hydropower contributes 2 percent to total consumption. Natural gasdemand in Malaysia is mostly in power sector and estimated percentage of 59.60.Second highest demand is for industrial sector and followed by non-energy andtransport respectively.

Chart above shows that, in Malaysia, demand for natural gas for domestic use

increases year by year. Therefore, amount of being exported reduced as the domesticuses increases.

Gas price and scope of other gas producing countries


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Table above shows the top ten natural gas producing countries. United States is thelargest producer of natural gas with a production amount of 611 10

9cubic meters. The

discrepancy between the amount of natural gas produced and/or imported and theamount consumed and/or exported is due to the omission of stock changes and othercomplicating factors.

Figure above shows natural gas price from 2008 till 2014. After 2008, there is a drasticdrop in natural gas price from 13USD to 3.7USD. Starting from 2009 onwards, the price

was fluctuating. However, lowest price was recorded during end of 2012. 4.75USD wasrecorded on Mar 2014 which considered as the latest price.


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The chart above shows monthly usage of natural gas in United States. Naturalgas is mainly used for electric power generation which 36% and followed by 28% ofindustrial applications. Residential and commercial consumes 16% and 11%respectively. However, only 5% of natural gas is being used in oil and gas industryoperations. Pipeline and distribution uses 3% and surprisingly natural gas is used asvehicle fuel for less than 1%. Natural gas is used to produce steel, glass, paper,clothing, brick, electricity, and as an essential raw material for many common products.Some products that use natural gas as a raw material are: paints, fertilizer, plastics,antifreeze, dyes, photographic film, medicines, and explosives. Slightly more than halfof the homes in the United States use natural gas as their main heating fuel. Naturalgas is also used in homes to fuel stoves, water heaters, clothes dryers, and otherhousehold appliances. In 2011, U.S. natural gas proved reserves, estimated as "wet"gas which includes natural gas plant liquids, increased by 10% to 349 trillion cubic feet(Tcf). Major improvements in shale gas exploration and production technologies drovethe increase in U.S. natural gas proved reserve.

In Australia, natural gas demanded mainly in manufacturing as it consumes 32% of thegas. Electricity production uses natural gas for 31% and followed by mining for 19%.Residential and commercial sectors use natural gas for just 11% and 4% respectively.


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Analysis of comparison

Variations in the amount of natural gas being produced, the volume of gas beingimported and/or exported and the amount of gas in storage facilities are the threesupply side factors that may affect prices of natural gas. Increases in supply tend to

result in lower prices, and decreases in supply tend to increase prices. There are threedemand side factors that may affect prices of natural gas as well. There are known asthe level of economic growth, variations in winter and summer weather and the oilprices (the effects of oil prices on natural gas prices varies by global region). Higherdemand tends to lead to higher prices, while lower demand tends to lead to lowerprices.

Figure above shows the predicted demand for natural gas till 2040. Among all theregions, Asia is seems to have highest increasing demand and followed by the NorthAmerica in the second place.


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Figure above shows the predicted supply for natural gas till 2040. Former Soviet Unionand Asia regions are expected to have a good increasing supply of natural gas.However, not much difference can be noticed in the supply pattern of North Americaand Middle East.

Price differences in natural gas can be seen between regions in the chart above.

Spot prices of Asian differ slightly from European prices. Therefore, not much differencecan be noticed between Malaysias natural gas prices with other countries price. Eventhough price is almost similar, the usage of natural gas and the priorities variesaccording to countries.

Conclusion

Over the past few years, natural gas found its place at the heart of the energydiscussion. It contributes greatly to national economy. However, never to forget thatnatural gas is a non renewable source and its priorities should be lessened. More

research on renewable sources as an alternative for natural gas need to be consideredin future.


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Reference

cleanenergy/energy-and-you/affect/natural-gas.html

http://www.malaysiangas.com/portal/document/publication/1309564614_Advocacy%20f.pdf

http://www.eia.gov/countries/analysisbriefs/Malaysia/malaysia.pdf

http://www.nasdaq.com/markets/natural-gas.aspx

http://naturalgas.org/overview/uses/

http://www.malaysiangas.com/portal/document/publication/1392194161_Gas%20Report.pdf
http://www.malaysiangas.com/portal/document/publication/1309564614_Advocacy%20f.pdfhttp://www.malaysiangas.com/portal/document/publication/1309564614_Advocacy%20f.pdfhttp://www.malaysiangas.com/portal/document/publication/1309564614_Advocacy%20f.pdfhttp://www.eia.gov/countries/analysisbriefs/Malaysia/malaysia.pdfhttp://www.nasdaq.com/markets/natural-gas.aspxhttp://naturalgas.org/overview/uses/http://naturalgas.org/overview/uses/http://www.nasdaq.com/markets/natural-gas.aspxhttp://www.eia.gov/countries/analysisbriefs/Malaysia/malaysia.pdfhttp://www.malaysiangas.com/portal/document/publication/1309564614_Advocacy%20f.pdfhttp://www.malaysiangas.com/portal/document/publication/1309564614_Advocacy%20f.pdf

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