
07 Nov Saturn, Titan, and Natural Gas Markets
I was born in 1972 when the space race was at its peak. A few years later, I had the pleasure of living in Venezuela (where children were considered important members of society) until 1978, when I returned to Bolivia. These events, along with the constant support of my father, led to a life surrounded by “space matters.” As a result, my first drawings were about rockets, spaceships, and, in general, everything beyond our good and peaceful Moon. Life took its course, and I ended up dedicating myself to economics—specifically, energy economics. However, I still can’t resist reading, from time to time, the fascinating news about humanity’s adventure in space.
That’s how I discovered Titan, a satellite of Saturn with truly remarkable characteristics. One of them—the one that interests me most is that this moon has seas of methane and ethane. What? Yes! Due to its extremely low temperatures and dense atmosphere, the “gaseous” natural gas we know on Earth exists in liquid form on Titan—and even forms seas! Take a look, for example, at an artist’s depiction of this satellite (illustration from the excellent magazine Muy Interesante).
Why Is This Important?
The way these compounds exist on Titan has reshaped the natural gas markets on Earth. Until a few years ago, buying and selling this product often required building a pipeline (a simple tube) connecting the producer field with the final consumer. For example, natural gas located 3 kilometers underground in one country could be burned by a kind housewife in another country (3,000 kilometers away) to prepare delicious spaghetti for her family.
That was the way the world worked—we built large and “very long” gas pipelines, signed long-term contracts, and monopolies (and monopsonies) were at their peak. In simple terms, a few controlled a lot. But technology did what it always does: it changed the way we see and do things. Suddenly, someone thought that it wasn’t necessary to build a pipeline to transport natural gas. Instead, the solution was to lower the gas’s temperature to an extreme (like on Titan), turning it from a gaseous state into an economical and efficient liquid form.
This “small” technological change dramatically transformed natural gas markets. Suddenly, natural gas could be transported in affordable and convenient ships across the sea. As a result, the trade of this product became intercontinental, and the old monopolies (sole sellers) and monopsonies (sole buyers) began to be pushed out of their comfort zones as they faced one of the most fundamental forces in market economies: healthy competition.
Dear reader, observe through this illustration how global liquefaction capacity—our ability to turn gas into liquid—has increased. By 2010, this process accounted for nearly 40% of the international trade of natural gas. Another striking figure is the number of ships built per year: in the last decade, this number doubled compared to the 1990s.
Capacidad de licuefacción en el mundo
What About South America?
When I say “home,” I mean South America. Right now, we are experiencing one of the most dynamic periods in the evolution of natural gas markets. Until a few years ago, the only significant gas-related news in the region revolved around the pipelines between Argentina and Chile and the massive one connecting Bolivia with Brazil. However, other developments are now becoming increasingly important: Argentina, Brazil, and Chile are buying liquefied natural gas (yes, like the one found on Titan) from distant regions. Meanwhile, Peru now operates a plant that allows it to liquefy gas and sell it to faraway destinations—such as the United States. In this context, Bolivian natural gas—or rather, Bolivia’s energy policymakers—must sharpen their strategies to face a competition that is no longer a possibility but a present reality.
Back to Titan
Before concluding, let me return to Titan. Seas of liquid natural gas take me back to my childhood, allowing me to dream of spaceships refueling on this moon before continuing their journey. To quote the Star Trek voice-over: “To boldly go where no man has gone before.”
S. Mauricio Medinaceli Monrroy
La Paz
November 7, 2011.
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