Fuel's Future; Business sees clean natural gas as the next dominant fossil fuel. But there will be political storms along the way.(Cover Story)

Byline: Christopher Dickey

The moment of maximum danger came suddenly on the evening of January 19.

The scene was the Algerian port of Skikda, where processing plants take natural gas pumped from the Sahara and cool it under enormous pressure to 162 degrees below zero Celsius. At that temperature the gas turns into a liquid that can be shipped all over the world in a new breed of refrigerated supertankers. When it arrives at its destination, liquefied natural gas, commonly called LNG, is then warmed very carefully until it becomes, again, the clean-burning stuff with the fine blue flame that sizzles hamburgers in countless kitchens, warms offices and bedrooms, and generates an increasingly large share of the electricity in the United States.

At 6:39 that January evening, one of the plant operators at Skikda noticed that the steam-pressure indicator in "Train 40," an array of compressors and separators, was rising fast. He tried to slow the fuel flow to the burners. One minute later, another operator reported that a vapor cloud was forming around Train 40. A disaster was taking shape.

For years oil companies have seen natural gas as the environmentally friendly fossil fuel of the future. Power companies have invested billions in new gas-fired plants that meet increasingly stringent emissions requirements. "Gas could overtake oil as the global No. 1 fuel of choice by 2025," says Malcolm Brinded, CEO of Shell Exploration and Production. Yet, as with other promising energy sources in the past, there's serious tension between the industry's best-laid plans and public perception of the risks that come with them.

On the plus side, virtually untapped natural-gas reserves are found all around the world. There's no gas cartel to deal with, at least for the moment. And the environmental benefits are manifest. Britain's switch from coal to gas at its power plants during the 1990s helped it more than meet its Kyoto emissions standards for 2010. Brinded even dreams that "young people" will learn "to think as positively about gas as they do about renewables such as wind and solar."

From the industry point of view, the main challenge has been the cost and difficulty of shipping the stuff. Gas can be sent through pipelines, but pipelines don't cross oceans, and many of the biggest gas fields are in terrain that's as politically problematic as the oilfields--Russia, the Middle East. Pipelines also distort markets, making it impossible to sell to the highest bidder.