The global natural gas industry has experienced an unprecedented period of growth and change, best captured by the International Energy Agency (IEA)’s 2011 notion of the ‘Golden Age for Gas’. When this book was first planned, it was conceived as an antidote to the tendency to lump the gas industry together with oil when considering geopolitics and energy security. We maintain that the materiality of natural gas as an energy source, and thus its geopolitics, is quite different from that of oil. Even today, the majority of natural gas is consumed within the country where it is produced. Until relatively recently, the vast majority of traded natural gas was moved by pipelines – it is only in the last decade or so that the growth of liquefied natural gas (LNG) production and trade has taken flight, to the extent that it will likely rival international pipeline trade sometime in the foreseeable future. However, most natural gas is still traded on a regional basis with regional prices and differences in price formation. In Asia, natural gas prices largely remain indexed to the oil price, although that may change due to market pressures, and institutional reform in key gas-consuming countries. In North America, and to a large extent in the EU, gas prices are formed based on gas-on-gas competition and the interplay between supply and demand. But, as this book explains, the status quo is continuously subject to change. Thanks to the expansion of the LNG trade, regional markets are increasingly linked and developments in one region impact on another. Thus, the price of natural gas in Europe is strongly influenced by the strength of demand in Asia (just as the oil price has traditionally played an important role). Investments in natural gas infrastructure are cyclical in nature. Periods of tight supply and high prices stimulate a new round of investment in production, which, depending on how demand responds to lower prices, may result in a period of over-supply and lower prices when new volumes come to market. As demand absorbs that supply and markets tighten, prices increase, stimulating a new round of investments, and so on.

Whether demand for natural gas will continue to grow is the subject of intense, and at times emotional, debate. As we explain, the natural gas industry has made much of the fact that it is the cleanest of fossil fuels, releasing half the amount of carbon dioxide (CO₂) emissions when burnt compared to coal, and having the ability to improve significantly the local air quality given the modest emissions of local air pollutants such as nitrous oxides (NO_x) and sulphurous oxides (SO_x). But the main component of natural gas – methane (CH₄) – is itself a potent greenhouse gas (GHG), and leakage of methane has the potential to cloud its aforementioned credentials.

At the same time, if we are to avoid the most catastrophic consequences of climate change, science dictates a transition to net zero emissions energy systems no later than mid-century. In this transition, natural gas has a role to play, but that role is different in different parts of the world and may be increasingly limited. Unless industry can improve the GHG footprint of natural gas (e.g. by curtailing CH₄ emissions, minimizing flaring, and investing in hydrogen, biomethane, and CCUS technologies), sooner or later the fuel will become part of the problem, rather than part of the solution. To be sure, a section of the environmental community has already reached that conclusion. In this context, our understanding of natural gas demand is blurred. We observe that most forecasts and scenarios expect natural gas to be the only fossil fuel experiencing demand growth well into the 2040s (and sometimes beyond). However, other scenarios and forecasts portray a different future for all fossil fuels, including natural gas. The IEA’s Sustainable Development Scenario, for example, suggests that demand for natural gas grows until the 2030s, but then levels off and declines substantially. As described, there appears to be significant room to improve the GHG footprint of natural gas, and if industry were to succeed in doing so, one would expect numbers in various studies and outlooks to start shifting again (assuming net zero emissions policies, rather than fuel or technology prescriptions). In addition, natural gas seems poised to play a prominent role in the fuel mix of many emerging economies, where air quality concerns trump many other policy objectives (and, in many instances, this shift results in benefits in terms of GHG emissions reductions as well). Consequently, natural gas is likely to play a substantial role in energy transition pathways in many parts of the world – yet the further out we look, the larger the uncertainties grow.

As a result of the issues described above, this book has been written in the context of natural gas abundance, swiftly growing demand and growing global interconnectedness, on the one hand, and mounting uncertainties about the role of natural gas in future low-GHG energy systems, on the other. The structure of the book is built around the evolving impact of three recent, and ongoing, revolutions. The first is the shale gas revolution that has heralded an age of resource abundance in North America, resulting in a surge in gas consumption in the United States and the growth of both pipeline and LNG exports, with ripple effects around the globe. The second is the coming of age of the LNG industry that is mobilizing new gas reserves – both conventional and unconventional – to satisfy growing demand in emerging economies that could until recently not tap into this market, providing a source of supply diversification in mature markets, and allowing emerging economies to monetize resources that were long considered difficult to bring to market. The third revolution – namely, improvement of the environmental footprint of the resource – is essential if natural gas is to play a significant long-term role in various energy transition pathways. This book is a modest effort to make accessible a set of complex and fast-changing issues. Inevitably, it is far from comprehensive and some readers will feel that key regions and issues have been omitted or only touched on lightly. We have chosen to focus mostly on those regions that are critical in shaping supply of and demand for natural gas as we currently observe it – namely, North America, Eurasia, the Middle East and East Asia. That is not to say that developments elsewhere are not important, but we believe that this trade is at the centre of the processes that are shaping supply and demand for natural gas.

To adapt a well-known African proverb, it has taken a village to complete this manuscript. For Michael Bradshaw, funding from the UK Energy Research Centre (UKERC) has been essential to supporting research on the global gas industry, as has funding from the EU’s Horizon 2020 programme for a project on the shale gas industry. He has also benefitted greatly from involvement in the Gas Programme at the Oxford Institute for Energy Studies (hereafter OIES) – surely, the world’s greatest concentration of ‘gas geeks’. Over the time it has taken to complete this book, much has changed, and he would like to dedicate this book to the memory of his father, Joseph Bradshaw, and his mentor Peter Daniels. He would also like to thank his family for their love and support, with apologies for the weekends lost working on this and many other projects.

The work of Tim Boersma was made possible by generous support from the Center on Global Energy Policy. He would like to thank his colleagues at Columbia University, and those in the natural gas research programme specifically, for numerous stimulating conversations and joint research projects. As always, he thanks his ‘partner in crime’ Susana, and his family and friends for their continued love and support. This manuscript would not have come to fruition without them.

We thank Louise Knight at Polity Press who first commissioned the book and who has shown great patience and provided tremendous support throughout the process. Most recently, Inès Boxman has provided the support and cajoling necessary to get the book across the finish line. We also thank our reviewers for finding the time and lending their expertise to evaluate this work. As ever, any omissions and errors remain our responsibility.

Michael Bradshaw
Coventry

Tim Boersma
New York