International Gas Union

1. International Gas Union Natural Gas Facts & Figures March 2012 1

2. Navigation-tool for the “Natural Gas – Facts & Figures” slide-pack • Markets for Gas • Power Generation • Industry • Chemical Feedstock • Natural Gas Resources, Supply & Transport • Reserves: Conventional & Unconventional • Gas Transport • LNG • Environmental Impact • Power generation from gas with / without Carbon Capture & Storage (CCS) • Efficient Partner for Wind (and other intermittent energy sources) • Prospects for Developments of Further Technological Options • Commercial Sector • Residential Sector • Transportation Sector 2

3. Goals and Objectives Highlight the value of natural gas to ensure its fullest economic and environmental contribution in low carbon energy systems 3

4. Cost estimates • Note: • The cost estimates in this package have been based on reliable, verifiable data. • However they may not concur with cost estimates in other publications. • This may be due to a variety of factors and assumptions, e.g.: • Prices of fossil fuels • CO2 prices • Location factors • Size of plants • Costs of steel • EPC costs • Discount factors • Lifetime of plants • All cost comparisons in this package should therefore be considered as indicative. • While capital costs of different options may vary considerably in absolute terms, in relative terms there is very little variance • (For reasons of consistency all cost data used in this package have been taken from the June 2010, Mott MacDonald (MMD) report for the UK DECC) 4

5. 1Markets for GasCost effective, Convenient and Efficient 5

6. Growing Global Demand for Gas Source: IEA, The Golden Age of Gas, 2011 (GAS scenario) 6

7. Power Generation 7

8. Meeting Electricity DemandEXPLANATORY NOTES PEAK-LOAD, MID-LOAD and BASE-LOAD SUPPLY Same demand ranked in descending order illustrated by a “load duration curve” and corresponding supply Electricity demand fluctuates from hour to hour over a year Wind PEAK-LOAD SUPPLY Solar Hydro MID-LOAD SUPPLY Nuclear Embryonic Expansion Maturity Decline BASE-LOAD SUPPLY Jan Dec Source: IGU/ Clingendael International Energy Programme (CIEP) 8

9. Gas-fired Power GenerationCCGT (Combined Cycle Gas Turbine) Very efficient generation technology  Diagram CCGT, a combination of a gas turbine and a steam turbine. Efficiency ~ 59 %.  Modern combined cycle 1000 MW power plant (CCGT) 9

10. Gas-fired Power GenerationCCGT (Combined Cycle Gas Turbine) Very efficient generation technology • High efficiency (relative to other options) • Less thermal waste & less cooling needed • Compact equipment • Lower investment and operating costs than oil or coal plant • Shorter construction time and easier permitting process • Few environmental problems (relatively clean) • Less CO2 emission rights needed than for oil or coal Suitable for meeting base-loadandmid-loaddemand Source: based on MMD, June 2010 10

11. Gas-fired power generationLowest capital costs per MW installed 5 4 3 2 1 Capital costs of options may vary considerably in absolute terms, but very little in relative terms Indicative, cost levels million $/MW Source: MMD, June 2010 11

12. Gas: A competitive option for new generationLow All-in Unit Costs per kwh produced Competitive for meeting Base-load Demand $/MWh • Prices (at plant inlet) • Gas : 8 $/MMBtu • Coal: 80 $/t Based on: 7000 hrs operation for gas and coal per year 2500 hrs for onshore wind per year 3600 hrs for offshore wind per year 7800 hrs for nuclear per year Source: MMD, June 2010 Capital costs of options may vary considerably in absolute terms, but very little in relative terms 12

13. Gas: A competitive option for new generationLow All-in Unit Costs per kwh produced Flexible and Competitive for meeting Mid-load Demand $/MWh • Prices (at plant inlet) • Gas : 8 $/MMBtu • Coal: 80 $/t Based on: 4300 hrs operation for gas and coal per year * Costs do not take account of effect of interruptibility on the plant efficiency Capital costs of options may vary considerably in absolute terms, but very little in relative terms Source: MMD, June 2010 13

14. Gas-fired Power: EfficientSmaller plant size reduces risk of overcapacity Minimum size to capture economies of scale (in MW) 1000 -1600 600 -1000 450 Source: MMD, June 2010 14

15. Gas-fired power: Efficient Short construction time reduces risks of demand uncertainty. years Plus shortest time for permitting etc Source: Energy Technology Perspectives, IEA 2010 15

16. CHP: A very energy-efficient option CHP: Combined Heat & Power. Also: "cogeneration“ Proven technology To reduce thermal waste from power production and use the heat. Higher efficiency than separate generation Saves energy and emissions Total efficiency ~80 %. Can take biogas Source: Energy Delta Institute 16

17. Industry 17

18. Gas: Convenient & Efficient Source of EnergyEconomic and Clean • Easy handling, lower installation and maintenance cost • Good controllability of processes and high efficiency • Direct heating or drying of products or materials • Clean and environment-friendly • Less CO2 emission rights needed (where applicable) 18

19. Gas: Convenient and Efficient Source of Energy(examples)  Steam drums for paper manufacturing Ceramic foam infrared heater (1150 oC)  19

20. Gas: The Efficient Source of Energy(examples) Infrared (IR) paint drying • Batch grain dryer 20

21. Chemical Feedstock 21

22. Industry chemical feedstock More than 165 bcm/year Gas conversion industry uses gas as an efficient and valuable source for chemical conversion into other products which are sold worldwide • Ammonia converts: some 135 bcm/year • → for production of fertilizer, fibers, etc • Methanol converts: 30 bcm/year Source: IGU/ Clingendael Institute (CIEP) 22

23. Chemical feedstock Many high quality and high value applications From Natural Gas Source: Dutch State Mines (DSM) 23

24. Commercial Sector 24

25. Gas: The Efficient Source of Energy Commercials Offices, schools, hospitals, leisure centers and hotels… Shops, restaurants, café's, … Small businesses, workshops, garages … • Easy handling once infrastructure is present • Lower investment cost compared to other fuels • High efficiency heating equipment available (incl. condensation) 25

26. Gas: The Efficient Source of Energy(examples) Green houses – use  Boiler house in green house.Gas use temperature dependent. • Assimilation illumination + Use of CO2 from exhaust gases as fertiliser 26

27. Residential Sector 27

28. Residential Efficient and environmentally friendly fuel for heating, hot water and cooking Clean and easy handling once infrastructure is present Low installation cost vs. other fuels High efficiency heating equipment available High comfort factor Individual heating systems in apartment blocks High efficiency heating system (hot water boiler) with storage vessel  High efficiency heating system 28

29. Micro CHP: Commercial applications in various countries • Micro CHP: • Heat and power from one apparatus • High efficiency system with generator • Your own home power plant - 29

30. Residential Cogeneration System Grid Power Air Conditioning Lighting Heating 暖房 エアコン 照明 乾燥 Heat Recovery Unit 貯 貯 シャワー Shower 湯 湯 ＴＶ TV GE Power Unit 槽 槽 風呂 Bath PEFC City Gas 本体 Buckup 追い焚き Floor Heating Hot Water 給湯 床暖房 Source: Courtesy Osaka Gas 30

31. Transportation Sector 31

32. Automotive Fuels: CNG and LNG CNG : Compressed Natural Gas Gas stored in vehicle at high pressure (200 bar) LNG : Liquefied Natural Gas Gas stored in liquefied form at atmospheric pressure (requires cryogenic tank and regasification equipment ) Best in heavy vehicles and ships Alternatives : Gasoline, diesel, LPG Position gas : Clean, low on emissions Feasibility depends on fiscal regime Best in vehicles with limited travel radiusand many stop-starts Reduces dependence on/import of oil 32

33. LNG as automotive fuel for heavy vehicles LNG is used in increasingly many places for road transport fleets: Buses, Dust Carts, Chilled Container Transporters – it gives good engine performance and a vehicle range comparable with other fuels LNG is suitable to fuel high-consumption transport where space for the LNG storage is readily available: e.g. trains and sea ferries LNG is less-suitable for small privately-owned vehicles because of more complex procedures and more expensive fuelling stations with special requirements regarding their location. Heavy vehicles do not lend themselves to be run on electric power. 33

34. CNG and LNG as automotive fuel for heavy vehicles (example) US builds Interstate Clean Transportation Corridor North America’s fuelling infrastructure has been built over the past 100 years, giving oil-based fuels an advantage over newer alternatives, like natural gas or hydrogen. Now, there is project to develop a new network of alternative fuel filling stations for long-haul trucking fleets in western United States. The Interstate Clean Transportation Corridor (ICTC) proposes a network of LNG and CNG facilities connecting heavily trafficked interstate trucking routes between Utah, California, and Nevada. The aim is to promote the conversion of heavy-duty fleets from diesel to natural gas in order to cut down emissions, reduce oil dependence and save fuel costs. Source: Interstate Clean Transportation Corridor 34

35. LNG as fuel for ships Application of LNG as bunker fuel is rising rapidly LNG propelled ferry, Norway 35

36. CNG based road transporta growing business (examples) Examples New VW Passat Estate TSI EcoFuel model powered with turbocharged CNG engine 1.4-liter TSI 110 kW (148 hp) emitting 119 – 124 g CO2 / 100 km With average consumption of 4.4 – 5.2 kg / 100 km and 21 kg reservoir possible range with one filling is around 450 km Turbocharged CNG engines 36

37. CNG based road transporta growing business (examples) Source : NGV Journal 07/2011 37

38. CNG based road transport 38

39. Natural gas for road transport Source: Gasunie ‘Natural gas, part of an efficient sutainable energy future, The Dutch case’, Feb 2010 39

40. 2Natural Gas Resources, Supply & Transport 40

41. Natural Gas reserves: plenty & more to come Proven conventional reserves are growing In addition: Unconventional gas has come within technological & economic reach Conventional Unconventional Coal bed methane Tight gas Shale gas Volume The total long-term recoverable conventional gas resource base is more than 400 tcm, another 400 tcm is estimated for unconventionals: only 66 tcm has already been produced. - IEA-Golden Age of Gas 2011- 41

42. Conventional Reserves:plenty and more to come Global proven gas reserves have more than doubled since 1980, reaching 190 trillion cubic metres at the beginning of 2010 Growing proven reserves 200 Europe tcm Latin America 160 North America 120 Africa Asia-Pacific 80 E. Europe/Eurasia Middle East 40 0 1980 1990 2000 2010 Source: IEA World Energy Outlook 2011 42

43. Types of Unconventional Gas Tight Gas Coalbed Methane Shale Gas • Occurs in ‘tight’ sandstone • Low porosity = Little pore space between the rock grains • Low permeability = gas does not move easily through the rock • Natural gas trapped between layers of shale • Low porosity & ultra-low permeability • Production via triggered fractures • Natural gas in coal (organic material converted to methane) • Permeability low • Production via natural fractures (“cleats”) in coal • Recovery rates low Source: Shell 43

44. Growth of unconventional gas productionImpact on US supply Developments of shale production in the United Stateshave a major effect on the US market and will impact rest of the world US shale production grows to about 45 % of total production by 2030 Source: James Baker Institute, Rice, 2010 44

45. World gas resources by major region (tcm)significant unconventional prospects world-wide Inventorization of unconventional gas is still at an early stage Source: IEA Golden Age of Gas, 2011 45

46. The prospects of unconventionals Unconventional gas offers potential for more domestic production in many countries Particularly for countries like China and Poland this could help to reduce dependence on coal First exports of unconventional gas under development Australia: First LNG export project based on Coalbed Methane (8.5 mt/a committed with potential to expand) US: Various LNG export projects in planning stage due to successful development of shale gas 46

47. The prospects of shale gas Shale gas is so far only produced in North America. Its true potential is still a matter of uncertainty. Environmental concerns revolve around ground water contamination resulting from hydraulic fracturing. Governments, together with industry, are addressing new regulation for shale extraction to protect public health and environment. Energy used for production and its CO2 emission is higher than for conventional gas (see next slides). 47

48. Well-to-burner greenhouse emissionsshale gas vs conventional gas Mt CO2-eq per bcm Incremental for shale gas: Flaring & venting Production All types of gas: Production, flaring, venting & transport Combustion Source: IEA Golden Age of Gas, 2011 48

49. Gas Transport 49

50. Energy Transportationdaily equivalents Basis: equivalent of 50 million m3/day of natural gas (1 large pipeline 48” or 56”) (diesel) Source: Energy Delta Institute 50