The global natural gas market is about to change more drastically than most observers expect, and in directions few suspect, according to a University of Houston economics professor and industry authority.
Michael J. Economides, co-author of The Color of Oil, a book about the economics of the industry, presented a paper at the Society of Petroleum Engineers annual meeting in Dallas earlier this month. R.E. Oligney and A.S. Demarchos were the paper's co-authors.
Economides said environmental concerns, whether "real or imagined," will push development of fuel-cell technology much faster than currently expected.
"By 2005, the age of hydrogen will dawn, pushed first by fuel cells running on natural gas or natural gas liquids.
"The not-so-secret multibillion-dollar research and development efforts among car manufacturersellipseand major oil companiesellipsesuggest that fuel-cell powered cars are on the immediate horizon," he said.
Economides predicted gas will supply 45-50% of the worldwide energy mix by 2020, as oil's share of that mix slides to less than 20%. By then, oil will be used as a "far more valuable" feedstock for plastic and other synthetics.
He said that, with only small growth in world oil consumption at that point, there will be enough crude for another 200 years, based on current ultimate recovery estimates. But there are enough worldwide gas reserves to sustain it as the primary fuel and main source for hydrogen power "well into the 22nd century."
Meanwhile, gas will fuel more than 90% of the proposed US power plants slated for the next decade. The only real constraint on that surge of new power capacity, Economides said, is a 3-year backlog of gas turbine orders.
But once turbine manufacturers catch up, the resulting ramp-up in gas demand will cause "substantial" supply shortages "for a considerable stretch of time," through both winter and summer peaks.