Warren R. True
Chief Technology Editor—LNG/Gas Processing
BILBAO, Apr. 1 -- A warning against complacency greeted attendees of Gastech 2005 here Mar. 14.
Even as the gas industry, and more particularly the LNG industry, seems to be riding the crest of a commercial wave with no end, BG Chairman Frank Chapman sounded warnings of trouble ahead from complacency, demand-destroying high prices, and changing geopolitical environments.
With new natural gas liquefaction plants, record-sized LNG tankers, and larger, more-efficient regasification terminals dominating industry's news, it was a sobering message for the nearly 3,000 delegates.
Change, complacency
Chapman called attention to the "high and flattering prices we see" and spelled out several challenges in a "world of great change" with "challenges raising the bar of performance."
He noted three propositions underlie his vision for the industry:
-- The first half of the century is the age of gas and, for the successful, the "size of the prize is absolutely huge."
-- The "big winners" will be companies that are "focused, agile, and imaginative" in how they meet markets and supplies.
-- As an industry, "we need to sell our message about the benefits of natural gas" to the rest of the world if "our growth is not to be constricted by competing fuels and competing technologies."
Chapman pointed to current studies of energy growth and natural gas's portion of that growth. Although gas growth has outstripped other fuels, the "rate of growth has diminished in recent years."
Other fuels
This trend, Chapman continued, sounds a "warning to our industry against becoming too complacent."
The gas industry can "sit back" and assume that the annual US Energy Information Administration and International Energy Agency projections for gas growth will "just roll in" and that "we will all get some slice of the action," Chapman said.
But that's "dangerous" thinking, not only because growth forecasts are weakening but also because of the challenge to gas from a range of sources.
The challenges he cited are from competing fuels, from increasing political intervention, from the "massive scale of investment" the industry faces, and from a "changing dynamic within our industry."
Chapman reminded delegates of the abundance of coal in the US, China, and India and of recent advances in technologies to make cleaner coal and in more efficient combined-cycle power generation. And he called attention to competition from nuclear fuel, admitting that the "economics don't work today" but that recent breakthroughs, demonstrated in China, may be a trend.
Industry should meet these challenges by reminding the world why natural gas is the "fuel of choice: it is clean and abundant." And industry must point to how well newly liberalized markets work, Chapman said, citing the UK.
Contact Warren R. True at [email protected].
