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A Greener Future: Major Differences Between Gas and Oil

Magnus Eikens
Feb 17, 2021
minutes read time

A shift from oil to gas is necessary for a greener future. Gas is increasingly attractive for its low carbon emissions, low sulfur content, high energy density and availability. While many carbon-based fuels have faced declining demands in recent years, liquified natural gas (LNG) is globally one of the fastest growing fuels today. LNG’s potential for the shipping industry and in the green transition to cleaner burning fuels can help achieve the targets of international agreements such as the UNFCCC Paris Agreement and the International Maritime Organization (IMO) 2020 regulations. This article highlights the major differences between oil and gas and the role of LNG in the green transition.

Current status of fossil fuels

Demand for fossil fuels has taken a considerable hit during the COVID-19 pandemic. However, due to companies switching to natural gas in power generation, and the relative stability of household gas consumption, natural gas has been shielded from demand decline as seen in oil and coal. However, global greenhouse gas (GHG) emissions must be drastically reduced in order to reach the Paris Agreement targets. A transition from oil to gas can help energy and shipping companies comply with emission requirements. In recent years, natural gas is a major alternative to oil, competing on both environmental and economic terms.

Fossil fuels currently play a major role in electricity generation today

Currently, natural gas, oil and coal account for more than 80 % of the global share of total energy consumption, each accounting for 22,9 %, 31,3 % and 25,6 % per 2019, respectively (OWD). Common applications for coal, petroleum products (oil), and natural gas are often similar, but the fuel types have different properties. This article highlights some of these properties and what the future holds for oil and gas.

Comparison of oil and natural gas

Natural gas is a gaseous hydrocarbon mixture of predominantly methane and some ethane. Like natural gas, “oil” is a broad term, and may refer to a range of substances such as rock oil, mineral oil and crude oil. Oil in the context of this article refers to crude oil, the raw, liquid natural resource which is often refined into gasoline, diesel and other petrochemicals. Oil may be classified according to its geographical location of drilling, its sulfur content and its API gravity. The latter classification helps separate light oil from heavy oil by measuring its hydrocarbon density compared to water. Another classification of fuel oils is through the six fuel grades, where viscosity, boiling point, and the length of the carbon chain increases with the number. This grading system is commonly applied in the US.

Whereas natural gas mostly consists of methane and ethane, with one and two carbon atoms, and four and six hydrogen atoms, respectively, the six fuel grades classification starts at hydrocarbons of chain lengths 9-16 atoms. In terms of heating value, methane and ethane, the main components of natural gas, are among the most efficient fuels available today.

The price of these fuels are normally inversely proportional to its number, i.e. no. 1 fuel oil, also known as jet fuel, is more expensive than no. 6 fuel oil, also known as heavy fuel oil (HFO). The latter is one of the primary fuels used for cruise ships. Marine gas oil (MGO), which is roughly equivalent to no. 2 fuel oils, and marine diesel oil (MDO), no. 3 fuel oils are both commonly used as bunker fuels.  

While many carbon-based fuels have faced cooling demands in recent years, liquified natural gas (LNG) is one of the fastest growing fuels globally today. When compared to fuels such as oil, LNG has a high energy density, low sulfur content and relatively low carbon emissions, making  it an optimal substitute for other, “dirtier” fuels in the green transition. Other properties of LNG, such as its ability to take up 1/600th of the space natural gas in a gaseous state would occupy, makes it suitable for sea borne transfer by ship.  

Small scale LNG shipping will likely become an important part of the future’s energy system.

The price between oil and gas is correlated as they are similar energy commodities. The price relationship is said to be an “inter-commodity spread,” so the market attempts to benefit from the value of the differential between the two, meaning that one becomes more desirable if the other becomes more expensive. Clearly, the two are closely linked in terms of application, chemical structure and market value, but in terms of pollution and energy efficiency, natural gas holds an advantage over oil. The pollution profile of fuel is of particular interest to actors within the shipping sector due to recent IMO 2020 regulations regarding pollution.    

Effect on the shipping industry

Shipping serves a vital role in global trade. The industry is increasingly  expanding, and between 80 and 90 % of world trade is conducted by sea. Transportation by sea is one of the most cost-efficient ways of transporting goods, and even though it is very efficient in terms of tonne-kilometre (tkm), it is a significant contributor to air pollution and GHG emissions. In terms of marine fuels, a big share of the world’s trading fleet’s main engines run on bunker fuels such as HFO, and their auxiliary engines run  on distillate fuels such as MGO or MDO.  

Until now, using natural gas as a marine fuel has not been very common, but due to IMO 2020 regulations, the stage is set for a new generation of tankers running on LNG.

For bunkering applications, natural gas is most commonly stored and transported in the form of LNG and will be transferred to gas form before combustion. There are several advantages of using LNG as a marine fuel, including large reserves, energy costs of LNG is at the same level as MDO, and technology for propulsion and storage in the ship already exists. Additionally, natural gas offers lower exhaust emissions than other fossil fuels, making it a cleaner alternative to conventional oil fuels.

The following data shows the benefits of natural gas compared to MGO, MDO and HFO in terms of CO2 and SO2 emissions (SSB):

LNG has a great advantage in terms of emissions compared to other fossil fuels used in shipping.Data compiled from Statistics Norway’s Emission factors used in the estimations of emissions from combustion,

In addition, compared to the other fuels, both Nitrogen Oxide (NOx) emissions and particulate matter (PM) emissions can be substantially reduced by switching to natural gas. Sulfur Oxide (SOx) and NOx emissions have large impacts on sensitive ecosystems due to acidification and eutrophication. PM and SOx emissions can also have severe health implications related to respiratory disease.  CO2 emissions are one of the world’s most pressing challenges, and is a primary driver of climate change.

The technology for gas driven engines already exists, and is under constant development to adapt to current market and industry conditions. LNG fueled marine engines include lean burn spark-ignited engines (LBSI), dual fuel gas engines and gas diesel engines. Even though dual fuel engines and lean burn engines have higher emissions of hydrocarbons (HC) compared to diesel engines, these HC emissions can be reduced by around 80 % by employing an oxidizing catalyst. (STS).

Future energy outlook - transition and renewables

Green initiatives, in combination with planned post-pandemic economic stimulus, have the potential to lower carbon dependency worldwide faster than previously anticipated. Several market actors speculate whether the COVID-19 pandemic has accelerated peak demand for fossil fuels, and particularly for coal and oil. Where previous estimates commonly pointed to the years between 2030 and 2035 for peak demand, more recent studies suggest that the peak occurring somewhere between 2025 to 2030 is not unlikely. This is an important factor to have in mind when comparing the differences between oil and natural gas going forward. However, fossil fuels still play a critical role in today’s energy and economic systems, and will for some time to come. Luckily, today we have effective measures and technology to curb emissions. Due to its high energy efficiency and beneficial emission characteristics when compared to fuel oils, LNG could serve as a transition fuel on the road to a greener future. Also, the development of hydrogen as a reliable source of energy, carbon capture- and storage (CCS) and other pivotal solutions which make energy consumption cleaner are to be closely monitored in the time to come.

Last updated:
Feb 18, 2021

This article is co-written by Magnus Eikens and Mats Møller.

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Magnus Eikens


Magnus Eikens

Chief Commercial Officer
As co-founder of Connect LNG AS, he has developed and brought to life the world's first jettyless LNG transfer system. He holds a decade of experience in business development, strategy and commercialization, and is also a member of the Board of Directors of Energy Network Norway (ENN): a network of industry professionals and global companies leading Norway’s commitment to Clean Energy.

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