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% of
ethane, propane and butane, 0-8% of carbon dioxide, 0-0.2% of oxygen, 0-5% of
nitrogen, 0-5% of hydrogen sulphide and traces of rare gases. Natural gas is a fossil
fuel formed when layers of buried plants and animals are exposed to intense heat and
pressure 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 are
drilled into the ground to remove the natural gas. After the natural gas is extracted, it is
treated at gas plants to remove impurities such as hydrogen sulfide, helium, carbon
dioxide, hydrocarbons, and moisture.

As with other energy commodities, reserves of natural gas often do not lie near
major centre of demand, resulting in international trade. Around 30 per cent of natural
gas produced is internationally traded which is much lower than for crude oil, which has
around two-thirds of production traded, reflecting the greater difficulties in transporting
gas. However, natural gas is traded more than coal, which had only around 15 per cent
of production internationally traded in 2010. There are two main technologies for
transporting and trading natural gas pipelines, where gas is transmitted under high
pressure through steel pipes and LNG, where gas is cooled to a liquid at minus
160 degrees Celsius in large trains, reducing its volume by more than 600 times for
transport in specialized tankers. International pipeline trade is around twice the size of
LNG trade.

However, LNG is more economic than pipelines over long distances, particularly
across oceans. Accordingly, it is used to bring production to market from remote or
stranded gas fields, provides pipeline customers with alternative supply options from
further afield, and is particularly useful in servicing coastal population centre. In the
unlikely 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 by
specialized tanker with insulated walls, and is kept in liquid form by auto refrigeration, a
process in which the LNG is kept at its boiling point, so that any heat additions are
countered by the energy lost from LNG vapor that is vented out of storage and used to
power the vessel.
Natural gas is the cleanest of fossil fuels and been used widely for homes and
industrial activities. It emits fewer pollutants than other resources such as coal or oil and
produces very low ash particles after combustion. Natural gas been used widely in
applications such as in the production of steel, glass, ceramics and even electricity
generation 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 methods
where natural gas is used to produce electricity. One method is to burn the gas in a
boiler to produce steam, which is then used by a steam turbine to generate electricity. A
more common approach is to burn the gas in a combustion turbine to generate
electricity. However, there is another method which is getting popular where natural gas
used in a combustion turbine and uses the hot combustion turbine exhaust to make
steam to drive a steam turbine. This technology is called "combined cycle" and achieves
a higher efficiency by using the same fuel source twice.
Even though natural gas is a good source of non-renewable energy, but it still
brings environmental impacts. For an example, burning of natural gas at a power plant
produces nitrogen oxides and carbon dioxide, but in lower quantities than
burning coal or oil. Methane, a primary component of natural gas and a greenhouse
gas, 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 during
transportation. Emissions of sulfur dioxide and mercury compounds from burning
natural gas are negligible. The average emissions rates in the United States from
natural gas-fired generation are: 1135 lbs/MWh of carbon dioxide, 0.1 lbs/MWh of sulfur
dioxide, and 1.7 lbs/MWh of nitrogen oxides.

Compared to the average air emissions
from coal-fired generation, natural gas produces half as much carbon dioxide, less than
a third as much nitrogen oxides, and one percent as much sulfur oxides at the power
plant.

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, the
second largest exporter of liquefied natural gas globally, and is strategically located
amid important routes for seaborne energy trade.


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 reserves
holder 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 are
associated with oil basins, although Sarawak and Sabah have an increasing amount of
non-associated gas reserves that offset some of the declines from mature oil and gas
basins offshore Peninsular Malaysia.




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 the
countrys energy consumption is met by coal. Biomass and waste make up another 4
percent, and hydropower contributes 2 percent to total consumption. Natural gas
demand 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 and
transport 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 domestic
uses increases.


Gas price and scope of other gas producing countries



Table above shows the top ten natural gas producing countries. United States is the
largest producer of natural gas with a production amount of 611 10
9
cubic meters. The
discrepancy between the amount of natural gas produced and/or imported and the
amount consumed and/or exported is due to the omission of stock changes and other
complicating factors.



Figure above shows natural gas price from 2008 till 2014. After 2008, there is a drastic
drop 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 was
recorded on Mar 2014 which considered as the latest price.




The chart above shows monthly usage of natural gas in United States. Natural
gas is mainly used for electric power generation which 36% and followed by 28% of
industrial applications. Residential and commercial consumes 16% and 11%
respectively. However, only 5% of natural gas is being used in oil and gas industry
operations. Pipeline and distribution uses 3% and surprisingly natural gas is used as
vehicle 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 half
of the homes in the United States use natural gas as their main heating fuel. Natural
gas is also used in homes to fuel stoves, water heaters, clothes dryers, and other
household 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 drove
the increase in U.S. natural gas proved reserve.


In Australia, natural gas demanded mainly in manufacturing as it consumes 32% of the
gas. 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.


Analysis of comparison

Variations in the amount of natural gas being produced, the volume of gas being
imported and/or exported and the amount of gas in storage facilities are the three
supply 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 three
demand side factors that may affect prices of natural gas as well. There are known as
the level of economic growth, variations in winter and summer weather and the oil
prices (the effects of oil prices on natural gas prices varies by global region). Higher
demand tends to lead to higher prices, while lower demand tends to lead to lower
prices.



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



Figure above shows the predicted supply for natural gas till 2040. Former Soviet Union
and 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 America
and 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 difference
can be noticed between Malaysias natural gas prices with other countries price. Even
though price is almost similar, the usage of natural gas and the priorities varies
according to countries.


Conclusion

Over the past few years, natural gas found its place at the heart of the energy
discussion. It contributes greatly to national economy. However, never to forget that
natural 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 considered
in future.












Reference

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

http://www.malaysiangas.com/portal/document/publication/1309564614_Advocac
y%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%20
Report.pdf