From its early discovery as an unwanted byproduct of oil drilling, natural gas has ascended to a major player in the world’s energy mix, supplying about one-quarter of the world’s primary energy in 2022.1 This journey reflects technological advancements across the natural gas supply chain, changing patterns of energy consumption, and shifting dynamics in energy markets. In recent decades, the demand for natural gas has surged due to increases in supply, superior environmental attributes relative to coal in electricity generation, enhanced energy security concerns, and its great flexibility in end-use applications. Despite the important contribution of natural gas to our well-being, it is a major contributor to greenhouse gas emissions in the form of carbon dioxide emissions from its combustion and methane leaks across its entire supply chain.2
Natural gas exploitation was initially limited due to technological challenges in transportation and the large investments required for building extensive gas pipelines that posed a significant financial risk. This began to change in the 1920s when the growing oil production industry in the United States gained increased attention from investors at the same time that technical innovations improved pipeline technology. Ongoing advancements in pipeline infrastructure, big gains in the technology for liquefying natural gas (LNG), and shale gas fracking beginning in the early 2000s helped place the United States in a top position among global natural gas producers.
Europe’s development of natural gas began in the 1940s and 1950s when oil and gas reserves were developed in Italy, France, and Austria. This landscape abruptly changed in 1959 with the discovery of the massive Groningen gas field in the Netherlands that created export markets to Belgium, France, and West Germany. To avoid the perceived threat of a Dutch gas monopoly and, at the same time, help ease Cold War tensions between the East and the West, Europe simultaneously began to import gas from the Soviet Union and Algeria.3
The discovery of the vast North Field field in the Persian Gulf in 1971 vaulted Qatar to a major force in the global natural gas market. Regional conflict and economic instability in the region, combined with the high cost of shipping LNG, initially limited Qatar’s ability to capitalize on its gas reserves. However, the country’s extensive development of LNG export infrastructure enabled it to become a major exporter by the 2010s, which in turn generated enormous gains in per capita wealth.
The entire landscape of global natural gas production and consumption changed significantly in the 2010s. Asia’s consumption surged by 70% due to economic growth that caused big increases in the demand for natural gas for industry, households, and electricity generation. China began importing natural gas from Russia and Turkmenistan to reduce air pollution from coal consumption in electricity generation. Meanwhile, the nuclear disaster in Fukushima (2011) shuttered nuclear power plants in Japan, with imported LNG replacing some of the lost electricity generation.
Russia’s invasion of Ukraine in February 2022 abruptly reduced Europe’s natural gas pipeline imports from Russia. European countries quickly reactivated the development of previously dormant LNG import projects and have started the development of new projects.4 Much of that LNG has come from the United States.4 Germany began importing LNG for the first time in 2023 as operators fast-tracked the construction of Floating Storage and Regasification Units.5
At the same, most European countries have banned or heavily restricted shale gas fracking primarily due to environmental concerns such as water quality and induced seismic activity.6 Additionally, the European Union’s commitment to combating climate change focuses on investing in renewable energies instead of developing new fossil fuel infrastructure. LNG imports are seen by some as hindering progress towards climate transition goals. There is significant public concern in some countries about methane leakages. Economic, national security, political, and environmental aspirations will continue to be at odds with each other, at least in the short run.
1 Energy Institute, “2023 Statistical Review of World Energy,” https://www.energyinst.org/statistical-review
2 MIT Climate Portal, “How much does natural gas contribute to climate change through CO2 emissions when the fuel is burned, and how much through methane leaks?” July 17, 2023, Link
3 Högselius, P. “The political history of fossil fuels: coal, oil, and natural gas in global perspective,” In Handbook on the Geopolitics of the Energy Transition.; Scholten, D., Ed.; Edward Elgar Publishing, Inc.: 9 Dewey Court, Northampton, Massachusetts 01060, USA, 2023, pp. 67-83Link
4 U.S. Energy Information Administration, “Europe’s LNG import capacity set to expand by one-third by end of 2024,” November 28, 2022, https://www.eia.gov/todayinenergy/detail.php?id=54780#
5 U.S. Energy Information Administration, “Three more countries began importing liquefied natural gas this year, and more will follow,” August 30, 2023, https://www.eia.gov/todayinenergy/detail.php?id=60262
6 BBC News, “What is fracking and why is it controversial?” October 26, 2022, https://www.bbc.com/news/uk-14432401