There is a fundamental difference in the marketing and development of gas compared to oil. Oil transportation is cheap. Oil is a commodity in much the same way as wheat or sugar. The producers produce it, arrange for it to go to a refinery or a ship and that is the end of it. Oil is sold on a world market, essentially at a fixed price. Gas, on the other hand, is a highly competitive, variable priced commodity, where its price is a function of its ultimate use. It is also expensive to transport, especially over long distances, so it is either sold on a local market or uses capital-intensive dedicated infrastructure tied to particular markets. It is this linkage between the producer and the market, the “gas value chain” that sets gas aside from oil. This linkage is most important when considering development of large new gas sources.
It is no longer sufficient for a professional person working in the upstream gas industry to be knowledgeable in exploration, reservoir engineering, drilling, workovers and design of production facilities – the traditional work areas of SPE members. They now need to understand or at least appreciate the commercial aspects of gas transport, be it pipelines or shipping; and conversion to another product, be it LNG, GTL, Ammonia, DME etc., together with the dynamics and characteristics of the market.
Knowledge integration will lead to cheaper, fit for purpose, facilities, good business decisions adding value to stakeholders, and ultimately cheaper energy.