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THE future of oil is gas, a Slugcatcher observation which will annoy people who see them both as a form of petroleum, and students of ridiculous sayings who will be even more annoyed because the remark sounds like it has been lifted from a Yogi Berra original.

With apologies to the late Yogi, who once dominated baseball in the US and who did more to twist the English language than anyone else, but what is meant by saying “gas is the future of oil” can be best explained by three significant events which occurred last week, with each adding to a picture of profound change.

But first it is worth considering exactly what Yogi once told an interviewer to see the connection with petroleum.

“The future ain’t what it used to be”, is what Yogi said in a mangled statement which means the future will be different to what you may have been expecting.

Yogi wasn’t talking about the oil and gas industry when he offered those words of wisdom, but if you take a close look there is a theme which does apply to oil and gas.

Firstly, the future will be different because of the way technology has changed energy production and consumption patterns, thanks to the discovery of techniques to extract gas from tight rocks.

That single breakthrough is helping revive the US economy by lowering power costs and threatening the future of the Arab states as controlling guardians of the world’s oil supply, because a world glutted with cheap gas will eventually break free from the Middle East stranglehold.

Knowing how to extract gas and oil from tight shales and other types of rock is just one step in what might one day be known as the GGR – Great Gas Revolution – which changed the world in the same way steam engines did in the 19th century and liquid oil in the 20th.

A second step along the pathway to a gassy future includes changes to the way natural gas is traded.

A third step includes advances in drilling, production and liquefaction expertise, which is opening up that 70% of the world under deep water and not previously considered a target for exploration.

Marry all of those changes and you start to see why the future of oil is gas, because:

Gas reserves in the earth’s crust far outweigh oil reserves.

Liquids were the low-hanging fruit of the petroleum world, but have been “over-plucked”, limiting the potential for future production expansion.

Liquefaction technology has elevated LNG into an essential component of the global energy trade.

Deepwater drilling and floating production technology is opening the high seas to LNG developments, just as shale gas and coal seam gas boost onshore gas output, and
Major energy-consuming countries are keen to snap the nexus which hamstrings their economies to unstable Middle East oil flows.

Last week provided a number of examples of how the world is embracing an expanding gas future in preference to a future controlled by declining levels of liquid oil production.