THE CHALLENGES OF FURTHER COST REDUCTIONS FOR NEW SUPPLY OPTIONS (PIPELINE, LNG, GTL)

The share of transportation in total supply costs in general is likely to rise as supply chains lengthen with the depletion of reserves located closest to markets. Reduction in the cost of transportation will be necessary to transport the huge reserves of supplying countries to the major gas markets. In the past two decades, the cost of pipeline transportation offshore or onshore and the cost of LNG supply has decreased significantly. Significant potential remains for reducing transportation costs through high-pressure pipeline technology, deepwater pipeline systems, more efficient LNG plants and larger carriers. Innovative technology may open up opportunities for exploiting resources that current technologies cannot tap. Continued advances in gas-to-liquids (GTL) technology could allow the development of some reserves currently considered to be “stranded” due to their small size and remoteness from markets.