G2X Energy offers a higher-value option for natural gas producers who are struggling with excess dry gas supply and depressed pricing.
Our ability to add value by converting natural gas into drop-in transportation fuel is the most compelling energy story in North America today. Our game-changing technology and process has the potential to strengthen natural gas markets, improve profits for producers and ensure stable, economically priced transportation fuels for consumers. Through a wide-variety of agreement structures, G2X Energy can offer natural gas producers a long-term solution to monetize natural gas reserves and re-allocate their risk profile from natural gas-based pricing to oil/gasoline-based pricing.
The long term availability and low price of natural gas will drive increased consumption for a variety of uses, but only the transportation market will have the capability to create sufficient demand to match the supplies unlocked by shale production technologies. Traditional uses, such as home heating and cooking, have limited elasticity and will not likely contribute a great deal of increased demand regardless of price. Non-traditional uses, such as power generation switching from coal to natural gas, exports of liquefied natural gas (LNG) and chemical process plants have the potential to augment demand but will be limited due to external constraints.
Some power generation will shift to natural gas, but it will be limited, particularly in the near term, to smaller facilities that have the ability to switch fuels easily. Large, base-load, coal plants do not have the technical or financial incentive to make an easy switch to natural gas. Even at current natural gas prices, coal remains a very competitive fuel source for large-scale power production. Without government intervention, utility companies will continue to operate fully amortized coal facilities rather than invest the enormous capital required to build new natural gas fired generation. In addition to these challenges, the power utility industry is accustomed to long-term fuel supply contracts, which are not readily available in today’s natural gas market.
CNG is economically viable for “return home” fleet vehicles but unlikely to be adopted by the mass market motorist due to large infrastructure retrofit requirements and consumer inertia. The driving motorist has consistently shown that range, power and the ability to refuel quickly and easily are the foundations of automotive ownership. Any option that requires behavior change has had limited market acceptance. Accordingly, the costs to retrofit the current vehicle fleet and refueling infrastructure to meet today’s driving experience will be untenable.
While several export facilities will likely be built, global economics and political pressure to keep natural gas at home will slow deployment and limit natural gas demand. Shale gas is truly a global phenomenon and as the shale production technology spreads beyond North America, natural gas produced from shale plays will expand dramatically. Today’s location price disparities are unlikely to withstand this global competitive pressure making the cost of LNG, from both a capital and operational perspective, uneconomic. The timing of this global growth will be similar to the construction cycle of a typical liquefaction facility. Likewise, the opportunity for the large amounts of low-cost natural gas to revitalize U.S. industry and improve U.S. competitiveness cannot be underestimated. Political pressure to “Keep Natural Gas at Home” is growing and already has delayed the approval of many proposed facilities.
Size and scale requirements will cap project development activity and limit plant construction to the energy majors. The timeline for the development of these projects will extend far into the future, and successful completion of a facility will remain at high risk. These factors, and the inherent nature of the Fisher-Tropsch process to produce a wide range of products, will limit the number of these plants and the natural gas they will need to process.
There is an unprecedented opportunity to reinvent the U.S. if the right choices are made. At G2X Energy, we believe that all of the options for use of U.S. natural gas resources have a role to play in the energy future of the U.S. We support new sources of natural gas demand that are safe, environmentally sound and create job growth.