Is the global natural gas pipeline half full or half empty? In other words, is the world's natural gas production headed for a peak along the lines of that expected for oil? Whatever happens, and whenever it happens, industry executives, analysts and even a few ministers from gas-exporting nations are beginning to acknowledge that demand for natural gas cannot continue to increase at the accelerating rate of recent years, or that projected for the future (PIW Oct.29,p1). If gas supplies are limited in the future, whether by geology or geopolitics, consumers at all levels will effectively be challenged to find an "alternative alternative," since gas is already viewed as the preferred substitute for both oil and coal. The peak in global gas supply will come sometime between 2010 and 2025, UK environmentalist Julian Darley estimates, unless there are either new gas finds of enormous magnitude, a safe and economic technology to tap methane hydrates, or an enormous global economic crash. The last is more likely than the others, Darley suggests, but would entail dramatic lifestyle changes for people in industrialized countries and lowered expectations for those in emerging economies.

In Qatar, several megaprojects, including LNG and gas-to-liquids (GTL) facilities, have seen their schedules slip by months to years from original plans. As a result, the Mideast Gulf nation is not expecting to reach its goal of LNG production capacity of 77 million tons per year until 2012, rather than 2010 as hoped, Energy Minister Abdullah al-Attiyah told last month's EIG-sponsored Oil & Money conference in London. Al-Attiyah cited the usual suspects as causes for the delay, including the number of major infrastructure projects of all types under construction around the world and the concurrent high demand for raw materials such as steel and cement. But he also told PIW that international oil companies have to shoulder some of the blame for the lack of "human infrastructure," because of the massive layoffs of engineers and other professionals in the 1990s. PIW has also learned that shortages of critical trace materials are contributing to the problem -- nickel, for example, a key component in high-strength steel, is in high demand, as is the industrial gas argon, widely used in welding applications.

While some gas export projects are being delayed, others may never even proceed to development, in Qatar and in other major gas resource holders such as Nigeria, in large part because of concerns about preserving enough gas to meet domestic demand. Concerns about the sustainable productive capacity of the giant North Field have forced Qatar to limit gas-based export projects to those already in operation, under construction or in development to ensure adequate supplies for power generation and industrial processes (PIW Mar.12,p3). Sources in Nigeria tell PIW a cap on export projects is in the works there too in order to preserve future gas production for domestic needs. These countries, along with Iran, Russia and, to a lesser degree, Australia, have often been regarded as near-limitless sources of gas for decades to come. But while Russia and Iran have trillions of cubic feet of known, but unexploited resources, geopolitics and growing domestic demand will determine how much goes into the global market. Whether these actions are harbingers of a peak followed by a rapid decline, or a peak followed by a plateau or gradual drop in gas production remains to be seen -- what they do clearly signify is that global gas supplies are not limitless.