Gas producers urgently need to find a way to turn abundant and low-value gas supplies into more valuable transport fuels like gasoline, diesel and jet.

The ‘hydraulic fracturing’ revolution has so far had a bigger impact on gas than oil. Soaring production has depressed the price of dry gas, and condensates like propane and butane, even as the price of crude oil remains close to record levels (on an annual basis).

The big gap between gas and oil prices is especially pronounced in the US, where the shale gas revolution originated, but looks set to spread around the globe.

Credible estimates suggest global shale resources will double the conventional gas resource base. But estimates of shale oil resources are much smaller (so far). Gas prices therefore seem set to remain much lower than crude in the medium term.

For gas and condensate producers, the pressing question is how to find new ways to market their production to capture more of the value associated with high-priced oil rather than the depressed value associated with fuel gas.

The simplest solution is to export gas to regions where gas prices are still linked to oil, including Asia and parts of Europe. More than a dozen US companies have applied to the US Department of Energy for permission to begin exporting natural gas from the US to higher-paying customers overseas.

via Turning gas into transport fuel – MENAFN.