It was not that long ago that natural gas was a waste product of the oil industry and flared instead of utilised as an energy source. Interest in natural gas increased as its value as a fuel for power generation and heating was understood. Natural gas is now projected to become the number two fuel in the global energy mix after oil. Not only is it one of the few viable alternatives in the power generation sector to back up intermittent renewables for power generation, but also the use of natural gas in power generation reportedly generates fewer CO2 emissions compared to oil and coal.
Natural gas is also substituting oil in the chemical sector, specifically ethane produced as a by-product in natural gas production for naphtha derived from oil. This is notably in the US where many chemical companies have relocated or announced relocations to sites close to shale gas plays or pipeline infrastructure. For example, Dow Chemical has announced plans to move its chemical industry to the US, but has also announced plans to site a chemical production facility in Jubail Industrial City, Saudi Arabia. This appears to be part of a strategy by countries in the Middle East to produce petrochemicals domestically in order to increase their revenues from hydrocarbons. Some Middle Eastern countries also plan to switch from the use of oil to natural gas for domestic power generation in order to optimise revenue and volume of oil exports.
A similar switch from coal to natural gas for power generation has been reported elsewhere. This is not due to any price advantage for natural gas, as coal is still a cheaper fuel source. Rather the move towards the use of natural gas is to meet carbon emission reduction targets, and because natural gas is a more flexible fuel. This switch has been more notable in the US and Europe to meet energy policy.
NRG Expert Global Natural Gas Report – Market Research
