Global Natural Gas Market and the Future Petroleum Engineering



Only a few decades ago, natural gas was treated as a waste product in the oil fields of the world and most of associated natural gas was flared. Today, natural gas consumption is growing at a rate higher than oil and coal and every year more countries invest in natural gas infrastructure. Low prices, abundant supply, and lower emissions are the main drivers for natural gas demand. Natural gas demand market includes several industries such as power generation, refining and petrochemicals, transportation, and manufacturing. The complexity of the integrated natural gas supply chain results in several challenges to be solved by the future petroleum engineer. This article first introduces some of the emerging markets for natural gas in the near future, followed by brief introduction to two of the main areas in which petroleum engineering graduates would use their skills in the next decade within the natural gas industry. 


In the next decade, the industry will witness the shaping of new supply and demand markets for natural gas. Several major offshore discoveries, such as East African and East Mediterranean Sea discoveries, will create significant opportunities for natural gas infrastructure development. In the U.S., shale gas production will see continuous growth with increased production from the Marcellus and Utica plays. In the meantime, rapidly growing demand centers would shape in South and Southeast Asia. A combination of population growth, industrialization, and long term government energy security policies support strong and steady natural gas demand growth in countries such as India, China, and Indonesia. In the Middle East, the mismatched distribution of hydrocarbon resources, coupled with rapid domestic energy consumption growth, will likely result in co-existence of major exporters and importers of natural gas. In the decades ahead, oil-rich countries such as Saudi Arabia and Kuwait will face natural gas deficit as Qatar continue to maintain significant LNG export capacity. The distance between major exporters and demand centers will result in a steady increase in global LNG trade. According to IEA, by 2040 more than 60% of global natural gas trade will be dominated by LNG. 


According to IEA, due to widespread utilization of digital technologies, technically recoverable hydrocarbon resource recovery could be increased by around 5%, with the highest potential in unconventional gas resources up to a 15% increase. Technologies such as subsurface real-time visualization, big data analytics, Artificial Intelligence, control process automation, and autonomous operations are among the tools which are currently used by some IOCs in upstream projects and promise the greatest improvements for the future. One particular area in which digitalization could help operators increase efficiency, includes coupling AI with advanced sensing equipment and data management algorithms. Such tools would be even more useful in the development of tight oil and shale gas resource based on the different life cycle of such projects. The nature of unconventional plays, and their rapid decline rates, require frequent drilling of new horizontal wells to maintain production levels. The short production and investment life cycle in these type of assets provide the opportunity of accelerating the learning curve by using lessons learned from previous projects to make near real-time adjustments and improvement in both drilling and completion techniques.While in conventional natural gas fields, recovery rates usually average above 90%, for most unconventional gas plays recovery factors are between 20-25% and digitalization of drilling and completion process could significantly increase these numbers.

In addition, as many of the giant fields of the world have already passed their half-life, implementing Enhanced Oil Recovery techniques would play an important role in an increase of production from these mature fields. Natural gas is an essential part of the secondary and tertiary recovery processes and comprehensive understanding of the geology and fluid dynamics is key to successful EOR design. Data-driven modeling can help generate hundreds of scenarios to improve the EOR screening process and recommend best practices. Needless to say, for the future petroleum engineer, in order to keep up with the current trend of oil and gas digitalization , it is mandatory to develop a series of digital skills in his/her repertoire. These skills include familiarity with most recent advancements in automation and robotics, data science techniques, computer sciences, data managements, etc. The above mentioned digital skills will soon be part of a petroleum engineer’s daily tasks. 


As previously mentioned, the natural gas supply chain is integrated with several other industries, such as power generation and transportation. Therefore, the issue of safety and security becomes of great importance for the sustainability of the natural gas industry. Despite the fact that California remains at the forefront of industrial safety and environmental protection, they witnessed one of the worst natural gas related environmental disasters in the 2015 Aliso Canyon incident due to leakage from an underground storage facility. Proximity of the facility to residential neighborhoods resulted in massive evacuations in a state of emergency. Such incidents demonstrate the importance of inherently safe design practice in the oil and gas industry. With the increasing share of natural gas in the future energy mix, the need for more safe and secure infrastructure appears inevitable.

In the meantime, despite the above-mentioned benefits of digitalization, the oil and gas industry will face a set of new threats in the area of digital and cyber security. The energy industry has consistently been among the top targets of cyber-attacks within the past few years. Therefore, the future petroleum engineer must receive adequate and comprehensive  education in the area of cyber security before entering the industry as a young professional. 


In a 2017 article by Drillinginfo, it was discussed that within the next 5-7 years, nearly 50% of the current oil and gas industry employees would be retiring. This translates into a large demand for new talent in the industry. E&P companies will need a wide range of skilled engineers to tackle some of the most challenging tasks ever faced by the industry. Therefore, a meaningful collaboration between the industry and academia would significantly help prepare a generation of petroleum engineers who have received adequate training. In the past seven years, as a petroleum engineering graduate student at USC, I have been actively engaged in the dialogue between our program and the industry. I have witnessed continual transformation within the industry, as well as the necessary resulting modifications within academia. USC petroleum program has continuously developed a platform for its students to adapt to the changes within the industry. Several courses such as Petroleum Informatics, Cyber & Physical Security in the Oil and Gas Industry, and Natural Gas Engineering were devised in response to the undergoing digital transformation in the industry.

Cyrus Ashayeri

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