Will this be the Natural Gas decade?

Nuclear plants are suddenly very unpopular around the world, since the Japan tsunami accident of 2011. Coal, while plentiful and cheap, is a climate change antagonist and contaminates the environment. Several economic trends favor natural gas. Lets look at four of the biggest.

LNG1. Asia boosts imports of natural gas  Japan already was the world’s biggest importer of liquefied natural gas before the earthquake upended its nuclear industry.  Japan has closed all of its 54 nuclear reactors. As recently as 2010, nuclear reactors supplied 30% of Japan’s electricity. This electricity capacity is being replaced by natural gas fired plants, through imports of liquefied natural gas (LNG).   China and Korea are also boosting their contracts and sources of natural gas.

2. Fleet truck conversion to natural gas accelerates  Lowes already has 7% of its trucks on gas and could reach as much as 20% within two years. UPS plans to buy 1,000 natural gas trucks by the end of next year. FedEx will shift 30% of its trucks to natural gas over the next decade. New natural gas truck engines are coming to market this year from Cummins and Volvo that can handle vehicles up to eighty thousand pounds. Long-distance truckers Con-way Inc., Swift Transportation and Werner Enterprises are testing compressed natural gas and liquefied natural gas powered trucks. T Boone Pickens has led an investment effort toward a nationwide fueling and repair infrastructure for natural gas. His Clean Energy Fuels Corp as well as Pilot Flying J have been building the infrastructure for long haul trucks to fuel with natural gas for two years. For shorter hauls, this year about 60% of all new garbage trucks purchased use natural gas. At Waste Management, 90% of its future purchases will be natural gas fueled. And many city public bus systems are substantially converted to natural gas.

3. European demand for natural gas is rising and sustained. Europe collectively is the world’s biggest energy importer. The energy import dependency of Europe is forecast to continue for the next decade. And the European Union has strict environmental controls on electricity power plants that have shifted demand from coal to natural gas in 2013. Germany will close all of its nuclear power facilities by 2022. In addition to electricity, natural gas is preferred for home heating in Europe in winter. With high prices and strained business relations with Europe’s leading historical natural gas supplier, Russia’s Gazprom, their market share has dropped from over 50% in the past to about 30% this year. For example, In Britain, BG Group PLC has signed a contract to import U.S. natural gas, and companies are exploring for new supplies.

4. LNG terminals for U.S. exports of natural gas U.S. companies are looking at building export terminals in at least eight locations. The U.S. Department of Energy has approved four terminals and four more are in approval cycles. Cheniere Energy Inc. is furthest along with its project at Sabine Pass, La., The Sabine Pass LNG Terminal commenced service in April 2008. Sabine Pass became the world’s largest LNG receiving terminal in 2008, and will be the first LNG export terminal online in the U.S.  In the next five years, the U.S.  will become an overall exporter of natural gas.

All of these megatrends suggest that although current supply is plentiful and prices are historically low for natural gas, the new uses of natural gas and competition for sourcing in the world economy may make this the decade of natural gas.