Class 6: natural gas markets

Question 1

H vs L gas

Answer 1

H: high caloric, higher methane share, efficient
vice versa

Question 2

wet vs dry gas

Answer 2

dry: water content lower due to dehydration process
wet: unprocessed/partially processed gas with hydrocarbons (bad for machinery)

Question 3

sour vs sweet gas

Answer 3

sour: high sulfur content, corrosive, low quality
sweet: low sulfur, no need to purify

Question 4

where are most reserves (2 regions)?

Answer 4

Middle East, CIS

Question 5

exports and imports, cons and prod. of gas?

Answer 5

pretty balanced consumption and production across regions, less need for trade (as of now)

Question 6

What is LNG, when is it used?

Answer 6

liquified natural gas, you can either compress the gas or lower its temperature (more common)
used to transport it by ship because volume much lower

Question 7

is there one global gas price?

Answer 7

no, markets are pretty separate due to fixed infrastructure, fixed costs necessary for trade

Question 8

why is the trade of natural gas so inflexible?

Answer 8

it can only be transported by pipelines (take long to build, expensive) or as LNG by ship, but then must be converted back into gas at specific factories (high fixed costs)

Question 9

who is the biggest importer of gas by pipelines?

Answer 9

Europe from Russia, but changing due to war

Question 10

who are biggest importers of LNG?

Answer 10

Asian countries, specifically China/Japan/Korea from Australia

Question 11

which 4 countries use most gas usage per capita?

Answer 11

US, Canada, Russia, SA

Question 12

what are shale gas and fracking?

Answer 12

gas distributed in shale rock layer in earth, instead of in big bubbles below earth
fracking is method to extract shale gas, by drilling horizontally and creating little cracks

Question 13

when did shale gas take off and who does it the most?

Answer 13

took off around 2005, majority in US

Question 14

how has production and consumption of natural gas changed in Europe since 70s?

Answer 14

demand increased, production fell, became importers

Question 15

what is gas used for and how does the seasonal demand in Europe look?

Answer 15

not transport, just heating and electricity
strong seasonal variation, demand high in winter and low in summer

Question 16

why are storages of natural gas so important to market/prices?

Answer 16

because of weather dependency, if demand high in winter because it’s colder than expected and storage runs out, prices skyrocket

Question 17

what does Swiss natural gas usage and import look like?

Answer 17

only for heating/industry, not for electricity
imports from rest of Europe because that’s where pipelines come from, no direct pipeline connections to other countries, dependent on EU gas imports

Question 18

what does Germany’s natural gas market look like?

Answer 18

wanted to use it as transitionary fuel, built Nord Stream because has no natural gas itself, dependent on Russia

Question 19

why is natural gas not used in transportation?

Answer 19

because cars are designed around oil, existing infrastructure. now focus is on EVs and zero fossils

Question 20

What is done to natural gas when it is processed?

Answer 20

remove sulfur, CO2 and water so it meets requirements to go through pipelines

Question 21

pipeline connections in Europe

Answer 21

lots of one way pipelines
going from Russia or Norway into Europe
South/East Europe gets from Africa, Middle East

Question 22

Why was the war actually bad for Russia regarding natural gas?

Answer 22

because it can’t just start selling extra natural gas to Asia instead of Europe, not enough pipelines/ infrastructure, very inflexible

Question 23

pipeline system in the US

Answer 23

most pipelines between different states, not across borders, more dense than Europe, high demand in Southern Texas (industry)

Question 24

process of transporting LNG over oceans

Answer 24

cool gas into LNG, fill special bubble shaped ships, transport, receiving terminal, turn back into gas, put back into pipeline, lots of infrastructure, tech.w complex

Question 25

why is gas liquified before transport?

Answer 25

decreases volume by 600x

Question 26

world’s biggest LNG suppliers?

Answer 26

Qatar, Australia

Question 27

why are ship tanks to transport LNG circular or membrane-shape, not rectangular?

Answer 27

less energy to keep cool because surface area is smaller

Question 28

why are countries hesitant to build natural gas infrastructure?

Answer 28

very high fixed costs (terminals, regasification etc.) and long time to build, must be confidence in future trade relations

Question 29

how is LNG looking in Europe since war started?

Answer 29

increasing, because natural gas from Russia is down so they’re replacing it with LNG

Question 30

when are LNG vs pipelines reasonable?

Answer 30

really long distances (e.g. US to Europe) pipelines not feasible, LNG
shorter distances: cost comparison, depends on costs, prices, exact distances

Question 31

what is peak vs baseload storage?

Answer 31

base load: large facilities with slow delivery times, full during summer and depleted in winter
peak load: high delivery rate for short period, small storage volume (a few days or weeks), to satisfy unexpectedly high demand

Question 32

different kinds of natural gas storage

Answer 32

depleted natural gas/oil fields: holes in ground we extracted from before, naturally well-insulated
aquifers: natural holes, must be monitored to make sure stone around isn’t permeable
salt caverns: if salt has formed it means water hasn’t been there for a long time, tight geo formation, you can dig out space and store gas (more expensive)
pipes also used as storage when not in use

Question 33

which storage types are used how?

Answer 33

natural fields are large, used for base load storage
salt caverns smaller, easy to extract and put back in, high withdrawal rates, used for competition reasons (withdraw quickly when prices increase)