Energy secretary Chu – “agnostic” about natural gas for transportation

When US energy secretary Steven Chu was asked about using natural gas for transportation he seemed reluctant to endorse it’s use. He said: “I’m agnostic, really, about it …if we significantly shift our use of transportation to use natural gas that will put a strain on natural gas use for industrial uses, for heating and other things .” Source.

Why worry about a lack of natural gas, Steven? Huge reserves of natural gas have been found in US shale deposits. Liquefied natural gas terminals are being bought into service. LNG tankers are plying the oceans. This has released large reserves of natural gas that have been stranded in geographic regions where it would remain unused. Here are some examples:

An additional six liquefaction plants will come on line by the end of this year. These facilities will produce a lot more LNG. Together they will nearly double global LNG production over the next few years.

For instance, the massive Sakhalin II project off the coast of eastern Russia just shipped its very first LNG shipment to Japan a few days ago.

An expansion of the liquefaction plant in Indonesia is expected to come on line by the end of the year.

And then there’s the big one. QatarGas’ liquefaction facilities are going through a major expansion. This project will bring an additional 24 million tonnes of LNG on the market this year. That’s nearly a 30% increase in LNG supply overnight.

The key thing here is not how many facilities are coming on line; it’s where they are.

The Sakhalin Island in Russia has huge natural gas reserves. For years though they were “waterlocked” (the inverse of landlocked). There was no way to get the natural gas to end users. That is, until the Sakhalin LNG facilities started coming on line.

The LNG production facilities in Indonesia are important too. There has always been very little domestic demand for Indonesia’s natural gas (I visited Indonesia too and most American’s would consider Indonesia’s living style primitive – outside the cities of course – but many of the people I met seemed quite happy). Indonesia is “waterlocked” too, except for Papua New Guinea to the east. Indonesia’s natural gas was stuck on the island. That is, of course, until LNG became a reality.

Finally, Qatargas is the big player. The Middle East has a lot of oil and it has a lot of natural gas too. Once again, domestic demand couldn’t soak up all the natural gas produced along with the oil. Pipelines to lucrative markets in Europe were too expensive to build. Qatar’s gas was unusable. Again, it was unusable until LNG came along. Source:

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