Michael J. Economides
Natural gas is rapidly becoming the premier source of energy with its share in the world consumption expected to increase significantly more than the conventional estimates, which are already bullish. For the United States, imported gas is the only solution to an emerging major shortfall from domestic resources. Presently natural gas is transported to the markets primarily by pipelines and, to a lesser extent, as LNG. Pipelines transport gas onshore conveniently and economically. Offshore transport by pipelines becomes economically challenging as the water depth and the transporting distance increase. LNG technology provides an effective long distance offshore transport of gas. Natural gas is liquefied and transported in specially designed ships to the consumer markets. However, LNG projects, several of which have been announced recently, require big investments and substantial reserves of gas and appear to be economically attractive for long distances, such as 2500 miles and more. An alternative technology has emerged that provides a solution for shorter-distance offshore transport of gas. The compressed natural gas (CNG) technology, aimed at monetizing offshore reserves without pipeline and LNG options, compresses the gas at high pressures and low temperatures and transports it in specially designed ships.
Our studies show that the CNG technology is technically feasible and commercially applicable. For distances up to 2500 miles and, depending on the actual distance, the cost of producing and transporting gas as CNG ranges from $1.08 to $3.82 per MMBTU compared to LNG, which costs $2 to $3.5 per MMBTU. For distances of 2500 miles and more the cost of the gas as CNG becomes essentially the same as LNG depending upon the conditions at which the gas is stored. In these cases the disparity of the volumes of gas transported and demands of the market play the deciding role for using the respective technologies.