CEH Report

Table of Contents

Abstract

As world energy demand continues to increase and alternative forms of energy such as water, wind and solar power fail to make significant enough inroads to ease emissions from traditional fossil fuel–derived manufacturing, more countries are deferring to readily available, cleaner-burning natural gas to meet domestic energy requirements. Moreover, in recent years, with advances in horizontal drilling and hydraulic fracturing, shale gas comes into play as a substantial current and future contributor to the natural gas supply portfolio.

The world's proved natural gas reserves recoverable with present technology, as of January 1, 2010, reached approximately 187,048 billion cubic meters. This was a 6.8% increase from 2007 reserves. Russia has the largest natural gas reserve base with about 47,500 billion cubic meters (25% of the world total in 2010); however, this estimate for Russia is classified as "explored reserves," defined as proved reserves plus some probable reserves. Several countries in the Middle East follow in terms of proved reserves volume.

Estimates of reserves can change over time as production depletes the reserve base. New reserve additions result from exploration in new areas as well as extension of existing reserves through drilling; especially with unconventional sources of natural gas (shale gas in North America). In regions of the world such as Russia, the Middle East and Asia Pacific, the potential to add new reserves through exploration activities is very significant. Although oil has been the historical focus of the bulk of world exploration activity, the upside potential of the natural gas resource base continues to attract the interest of many gas majors. Lower costs, higher efficiencies and environmental advantages have made natural gas a viable energy source.

The following pie chart shows world consumption of natural gas:

World natural gas consumption between 1990 and 2010 increased by 56%. Natural gas consumption currently accounts for one-quarter of world energy demand. In the United States, 25% of total primary energy consumption is in the form of natural gas (oil and coal account for the majority of the rest). North America was the largest natural gas–consuming region in 2010, with 25% of the world total, followed closely by Central/Eastern Europe/CIS with 21% and Asia/Oceania with 17%, surpassing Western Europe beginning in 2006. Consumption in Asia, Oceania and the Middle East has grown significantly in the past decade and is forecast to continue further development through 2015. In 2010, total world supply of natural gas slightly outweighed total world demand.

Natural gas (a fossil fuel, of primarily methane) is generally defined as a characteristic mixture of gaseous minerals containing both hydrocarbon and nonhydrocarbon gases that are found in subsurface rock reservoirs, often considered for practical and legal purposes as the gaseous phase of crude petroleum (associated gas). However, in many parts of the world, subsurface accumulations of natural gas are not apparently related to liquid oil accumulations, thus defining natural gas as a distinct and separate substance (nonassociated gas). Of all the fossil fuels, natural gas is the cleanest-burning.

Methane is the major component of natural gas (typically greater than 85% by volume). Natural gas also contains ethane, propane, butanes, pentanes, hexanes and small amounts of heptanes-plus compounds. Dry-form natural gas contains mostly methane (over 90%) with smaller amounts of NGLs compared with gas condensate and associated gas. Natural gas can contain inorganic or nonhydrocarbon gases such as nitrogen, helium, carbon dioxide and hydrogen sulfide. Natural gas is measured in both volume terms (cubic feet or cubic meters per year) and energy terms (quadrillion Btus or petajoules).