text.skipToContent text.skipToNavigation

5 Things Holding Back the Natural Gas Market

Production and demand for natural gas and liquid natural gas products has increased around the globe. While new drilling methods boost producers’ abilities to reach and yield this resource, a focus on efficient and environmentally friendlier energy generation methods drives the need for natural gas and LNG. However, the market is not without it’s issues in the U.S. and abroad. Multiple factors create barriers to the production and distribution of natural gas as well as the adoption of natural-gas-related technologies.

The State of the Current Market

The U.S. produces significant amounts of natural gas, and almost all of the natural gas consumed in the nation is from these domestic resources, according to a report from the U.S. Department of Energy. Large quantities of natural gas come from unconventional resources. In fact, shale gas increased from 3 percent to 40 percent of all production in the U.S. between 2002 and 2012. Not only did shale gas expand, but also total natural gas production rose 25 percent in the same period.

The U.S. isn’t the only country to benefit from additional natural gas production in the past decade. Overall, global natural gas production rose from 112,573 billion cubic feet in 2002 to 147,481 bcf in 2013, the U.S. Energy Information Administration reported.

Natural Gas Adoption Hindered by Obstacles

Despite the world’s growing dependence on natural gas for energy generation and the expansion of multiple related markets, including industry and transportation, many factors hold countries and businesses back from taking full advantage of the resource.

  1. Irregular demand: The director of Clingendael International Energy Programme, Coby van der Linde, pointed out that demand for natural gas and the ability to obtain it are inconsistent, according to the American Gas magazine. Some markets like Asia are seeing a rapid increase in their need for natural gas due to consumer demand and pollution issues. However, it’s unknown how efficiently China can delve into its domestic potential. Meanwhile, Europe is not experiencing economic growth, and other energy methods remain priced well, holding many countries back from increasing their use of natural gas.
  2. Lagging technology: Transportation is a promising and expanding market for natural gas use. However, the DOE report found the technology for natural gas vehicles isn’t perfect and, in some cases, increases costs. Though the fuel is generally cheaper than gasoline or diesel, using LNG vehicles can come with additional fuel storage requirements, limited fuel economy and high price tags. However, more businesses are finding ways to use LNG vehicles efficiently, and the sale of these trucks is expected to rise over the next decade.
  3. Missing and aging infrastructure: The need for natural gas infrastructure around the world is clear. This issue is also heavily connected to transportation. The widespread use of compressed natural gas and LNG vehicles is hindered by the lack of public fueling stations, according to the DOE report, though stations are being implemented around the U.S., particularly in California, Oklahoma, Texas and New York.
  4. Lack of skilled workers: Along with expanding industries comes the necessity for workers skilled in the needs of each particular industry. However, the rapid rise of the global natural gas market has not coincided with an increase in skilled workers, according to American Gas. Many oil and gas companies are losing baby boomers to retirement but aren’t able to replace these workers’ legacy knowledge with skilled millennials.
  5. Public policy: Much of what will benefit the natural gas market in the future is beneficial public policies that aren’t yet in place. As the need for natural gas rises, countries and states will be more likely to shift their policies to advance these markets instead of hold them back.