Saturn, Titan and natural gas markets

Saturn, Titan and natural gas markets

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I was born in 1972 when the space race was in full swing, after a few years 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 associated with the constant support of my dad, originated that much of my life was surrounded by «space issues», my first drawings were about rockets, spacecraft and generally everything that is beyond our good and gentle moon. Life and things showed me new ways in the economy arena, particularly in energy economics, however, I can’t avoid reading, occasionally, the exciting news about the adventure of man in space.

Thus I discovered Titan, a Saturn’s satellite that has very particular features, one of them – which really interests me – is that the moon has seas of methane and ethane What? That because the temperature is many degrees below zero and the existence of a dense atmosphere, the «gaseous» natural gas in the Earth is liquid in Titan, see for example the artist imagination regarding the appearance of this satellite (graph obtained from the excellent magazine «Muy Interesante«).

And why this is important? Well, turns out the way this liquid natural gas (as founded in Titan) changed the markets for natural gas on Earth. Until recently, the purchase and sale of this product needed, in many cases, the construction of a pipeline (a tube) to connect producing field with final consumers. For example, natural gas located 3 kilometers underground in a given country could be burned by the gentle housewife in another country (3,000 kilometers faraway) to prepare this tasty spaghetti and delight family.

World was happy place, we were building major gas pipelines and made long-term contracts were monopolies (and monopsonies) were very common… in simple, few managed too much. But technology did what it usually does, change the way we see and do things. Suddenly someone thought that it was not necessary to build a pipeline to transport natural gas instead we can put the gas at such a low (such as Titan) temperature to pass from gaseous state to the good and economic liquid state.

This «small» technological improve dramatically change natural gas markets. Suddenly the natural gas could be transported in comfortable and cheap boat across the sea, therefore, now trading this product is intercontinental and former monopolies and monopsonies are being expelled from their comfort areas, since now they are facing one of the most significant events in market economies: the good competition.

Note kind reader through this figure, how the liquefaction capacity increased in the world, the possibility of liquid gas. By 2010 it accounted for nearly 40% of international trade. Another striking figure is the number of vessels (boats) built per year in last decade this figure doubled compared to that observed in the nineties.

How are we going home? And when I mention «home» I mean South America. It currently live in one of the most enjoyable times in the evolution of the natural gas market. Until recently only news pipeline between Argentina and Chile and that «big» that links Bolivia with Brazil, were substantive in the region. But now other events are exceedingly interesting, Argentina, Brazil and Chile buy liquefied natural gas (yes, like that found on Titan) from remote regions (Asia, for example) and meanwhile, Peru operates a facility that allows to send natural gas to United States of America for example.

Medinaceli Mauricio Monroy