Ukraine war spurs LNG demand in Japan despite fossil fuel activism

Madeleine Bruder1 day ago

Reliance on LNG: a storage tank at the Tokyo Electric Power Co.mpany’s gas-fired thermal power plant in Futtsu © Tomohiro Ohsumi/Bloomberg

Green activists have put in a record number of demands to Japanese companies for action over fossil fuel investment — just as experts warn that liquefied natural gas (LNG) project financing will be necessary for several years because of the war in Ukraine.

During this year’s round of annual general meetings, climate activist groups, including Australia’s Market Forces and Japan’s Kiko Network, submitted shareholder proposals to four companies listed on the Tokyo Stock Exchange urging stronger commitment to tackling climate change.

Among the companies were Japan’s second-biggest lender, SMFG, and Tepco, a provider of electricity to Tokyo. According to the activists, the lifetime emissions from 10 LNG projects planned by these businesses will be around 1.2bn tonnes of carbon dioxide.

“Japan is on the front line of a global economy-wide transition driven by the need to adapt to the threats and opportunities of the climate crisis,” said Sachiko Suzuki, a researcher at Market Forces, in a statement in April. “Change is happening fast and those companies that fail to align their strategy are creating a grave risk to their future. Investors are alive to these threats and demanding action.”

Lenders say they are caught in the middle. In an interview with the FT in the same month, Masahiro Kihara, the chief executive of Japan’s third-largest lender, Mizuho, said the government should speed up the creation of a post-Ukraine energy plan, stressing it was indispensable.

Mizuho CEO, Masahiro Kihara, has called for more debate on energy policy and clarity on timeframes © Bloomberg

“What I’d like to be done is for the government and the private sector to have a very serious discussion about this,” said Kihara. “And I think that’s one thing that’s not being accomplished right now by the politicians. There’s no debate on energy policy.”

“There has to be a discussion with a specific timeframe in mind: for example, ‘until here, we’ll use LNG, after that, we’ll use renewables, etc’. We need to have that kind of grand design. And relying on other countries has become very risky,” he added.

Amendments proposed by activists at the AGMs required two-thirds majority support and they did not pass. Still, corporate executives privately say they cannot ignore strong shareholder backing of climate motions even if they are not agreed.

A case in point is a motion from 2020, when a climate group filed the first such proposal to Mizuho. The motion prompted the country’s three largest banks to refrain from financing future fossil fuel projects.

Jera’s LNG fired power plant in Ichihara © Toru Hanai/Bloomberg

Workers inside the power plant © Akio Kon/Bloomberg

Since Russia’s invasion of Ukraine in February, however, there have been several clear signs that the world is shifting back to more LNG, as gas prices on the spot market soar and Russia threatens to cut supplies to more countries.

Late last month, the G7 group of industrialised nations said investment in LNG was a “necessary response to the current crisis”, adding that, “in these exceptional circumstances, publicly supported investment in the gas sector can be appropriate as a temporary response.”

Another indicator, says Kaushal Ramesh, gas and LNG analyst at consultancy Rystad Energy, is France’s state-backed utility Engie signing a 15-year deal with Houston-based NextDecade — even though the talks were suspended in 2020 after the French government raised environmental concerns.

We are starting to see clear signs of a reversal of the ‘no fossil fuel’ policy

“The biggest sign of reversal is that European buyers are now signing 20-year contracts with the US,” says Ramesh. “We are starting to see clear signs of a reversal of the ‘no fossil fuel’ policy.” 

Ramesh cites a string of deals by US LNG companies as American exporters position themselves to fill the gap as Europe turns away from Russian imports.

Venture Global, an exporter on the Gulf of Mexico coast, says it has struck a deal to sell 1.5mn tonnes a year to EnBW, one of Germany’s largest energy companies, in the first binding long-term agreement by a German company to buy US LNG.

More stories from this report

Gas prices in Europe have jumped after Russia cut capacity on its main gas export pipeline to Germany, fuelling concerns that Moscow is weaponising its gas exports in response to EU sanctions.

The International Energy Agency said Europe must prepare immediately for the complete severance of Russian gas exports this winter, urging governments to take measures to cut demand and keep nuclear power stations open.

Rystad Energy warns that LNG demand will outstrip supply by the end of this year. The consultancy adds that “although soaring demand has spurred the greatest rush of new LNG projects worldwide in more than a decade, construction timelines mean material relief is unlikely only after 2024”.

Scott Neilson, partner at law firm Allen & Overy, says banks are “in a tough spot because they know that a lot of their clients want to be developing their businesses and their countries, and they’re given limited options”.

Neilson adds that it remains unclear whether resistance to lenders investing in LNG projects will affect funding at such a critical time, but adds: “Certainly not in the short run — maybe longer term when there’s viable alternatives but, at the moment, there’s a need for Asia-Pacific to transition away from coal, frankly.”

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AUSTRALIA

Column-Woodside's giant Scarborough LNG project may be the last of its type: Russell

Clyde Russell
Mon, November 22, 2021,

 The shadow of a man is cast onto a poster displaying the logo for Australia's Woodside Petroleum


By Clyde Russell

LAUNCESTON, Australia (Reuters) - For the first time in a decade a massive new liquefied natural gas (LNG) project has been approved for construction in Australia, but the Scarborough venture's structure and market realities indicate it may well be the last of its kind.

Woodside Petroleum and BHP Group gave final backing on Monday to the $12 billion plan to develop the Scarborough natural gas field off Western Australia and expand the onshore Pluto LNG plant to process the fuel.

The deal also sees Woodside merge with BHP's petroleum arm, with BHP shareholders to be issued new Woodside shares and ending up with about 48% of the expanded share capital.

Scarborough field lies about 375 kilometres (233 miles) off the coast of Western Australia state and holds about 11.1 trillion cubic feet of dry gas.

Woodside expects to produce about 8 million tonnes of LNG per annum at the to-be-built second train at its Pluto liquefaction plant, and is targeting first cargo in 2026.

The company also said that the all-in cost of the LNG to be produced is around $5.80 per million British thermal units (mmBtu), which is well below the current spot price of $36.70, but also considerably higher than the $1.85 the super-chilled fuel sank to in May last year during the height of the coronavirus pandemic.

The Scarborough and Pluto second train developments are also the first major LNG project to reach a final investment decision in Australia in about a decade, and comes after the industry spent around $200 billion to expand capacity to around 80 million tonnes, making the country the world's biggest LNG exporter.

At first glance the deal seems positive for both Woodside and BHP.

It transforms Woodside into a top-10 global independent oil and gas company and allows BHP, the world's biggest listed miner, an opportunity to profitably exit an area of business no longer viewed as core and frees it to concentrate on producing metals viewed as essential to the energy transition.

However, it also means that Woodside will face increasing environmental opposition to its business, especially in the wake of the COP26 climate summit and mounting calls for an end to new oil, gas and coal projects.

Woodside argues that Scarborough contains "only around 0.1% carbon dioxide, and Scarborough gas processed through the efficient and expanded Pluto LNG facility supports the decarbonisation goals of our customers in Asia."

It's highly unlikely that environmental and climate groups will share this view, and already they are lining up to fight against the new development.

The Conservation Council of Western Australia is bringing a case challenging the state's approval, without a full environmental review, to allow Woodside to process gas at the Pluto LNG plant from an expanded number of fields.

FINANCING

While there is likely to be ongoing and highly visible opposition to Scarborough, there are also other concerns more behind the scenes.

As part of the deal, Woodside entered into an agreement to sell 49% of the planned second LNG train at the Pluto processing plant to private equity group Global Infrastructure Partners (GIP).

The terms of deal effectively commit GIP to providing financing, but virtually all of the risk lies with Woodside with regards to potential cost overruns, regulatory hurdles and changes to emissions liabilities.

While GIP has a solid track record of investment in major projects around the globe, the involvement of private equity in a major LNG project in Australia breaks the usual pattern of partnering with global oil companies, major trading houses or utility customers in Asia.

The deal with GIP doesn't look advantageous to Woodside, implying that it was unable to find any takers among more traditional partners.

This could be a sign that LNG projects are getting harder to finance and that already the major buyers in Japan and South Korea are thinking of ways to meet their net-zero emissions targets by transitioning away from LNG.

The Scarborough LNG will also be hitting the market just around the same time as major expansions from Qatar and Russia also come to market, potentially creating an overhang of LNG at a time when major buyers are likely to be increasingly transitioning to renewable alternatives.

Effectively, Woodside is taking a bet that LNG will last in Asia's energy mix for far longer than it should if net-zero emissions goals are to be achieved.

(Editing by Muralikumar Anantharaman)

 

Zvezda Has Launched Three LNG Carriers, But Can it Complete Them?

Completed ships and partially-assembled blocks in Zvezda's vast main drydock (Zvezda)

PUBLISHED AUG 8, 2023 4:11 PM BY THE MARITIME EXECUTIVE

 

Russia's shipbuilding industry may have difficulties because of Western sanctions, but that has not prevented the Pacific yard Zvezda from completing the hull of Novatek's next icebreaking LNG carrier. 

Zvezda has launched the future Sergei Witte, a specialized icebreaking LNG carrier for use at Novatek's Arctic LNG 2 plant. Novatek is the world's only user of this vessel class, and it first ordered the vessels' development from South Korean shipbuilders for its Yamal LNG plant. The 15 Korean-built ships have been transiting to and from Yamal LNG for years, transiting westbound along Russia's Arctic coast during the summer months and eastbound to Europe in the winter. 

These ships are in short supply, and Novatek is already building a transshipment facility in Kamchatka in order to reduce the distance they have to travel each voyage. The development of its Arctic LNG 2 expansion plant will require a new, similar fleet.  

In 2017, Russian President Vladimir Putin encouraged Novatek and its partners to localize production of the icebreaking LNG carriers at the newly rebuilt Zvezda Shipyard, located just east of Vladivostok. The activity would provide workforce development and financial support for a strategic defense facility: Zvezda is state-owned, has a long history in repairing nuclear submarines, and is laid out to handle aircraft carriers.

“Not only Rosneft but also Gazprom, Novatek and other Russian companies must . . . place orders [with Zvezda] on time. Maybe, they should submit even more orders because Zvezda certainly has the potential for handling more orders than provided for in this [development] plan,” Putin said in September 2017, adding that he “will monitor this project closely.” 

The following month, Novatek complied with Putin's directive and said that it would enter a joint partnership with Sovcomflot to build its next 15 icebreaking LNG carriers at Zvezda. 

The class uses membrane containment tank technology, which is a sophisticated, high-value specialty dominated by South Korean yards. With assistance from South Korean shipbuilder Samsung Heavy Industries and French tank technology company GTT, Zvezda has completed the hulls of the first two ships in the series, and it has now launched the third. 

Zvezda has not completed a vessel of this type before, and aspiring new LNG carrier builders have had a mixed record of success - even without additional icebreaking features. Avondale Shipyard built its first three LNG carriers under a government program in the 1970s, all of which were refused by the owner over tank defects and converted or scrapped. Hudong-Zhonghua, the first Chinese yard to build an LNG carrier, encountered delays in its first few contracts as it got up to speed with tank technology in 2008-9; it would be another six years before a non-Chinese owner would place an order for a Chinese-built LNG carrier. 

In August 2022, Interfax reported a meeting with Putin at which Novatek CEO Leonid Mikhelson expressed a sense of urgency about completing Zvezda's LNG carrier projects on time. Putin acknowledged that there were "difficulties that we know about" and asked that "every effort be made for the projects to be realized," promising additional state support for Zvezda. 

GTT, the technology provider for the Zvezda LNG carriers' mission-critical tank membranes, backed out of the project in January 2023 because of EU sanctions exposure. In a statement, the firm said that it would only provide limited assistance for safe completion of the first two vessels in the series. 

Germany cuts the ribbon on first LNG terminal
Updated / Saturday, 17 Dec 2022 

Germany plans to open four more government-funded LNG terminals over the next few months

Germany has inaugurated its first liquefied natural gas (LNG) terminal, built in record time, as the country scrambles to adapt to life without Russian energy.

The rig in the North Sea port of Wilhelmshaven was opened by Chancellor Olaf Scholz at a ceremony on board a specialist vessel known as an FSRU, named the Hoegh Esperanza.

"It's a good day for our country and a sign to the whole world that the German economy will be able to remain strong," Mr Scholz said from the boat.

The Hoegh Esperanza sounded its horn as the chancellor, dressed in a high visibility jacket, approached.

German Chancellor Olaf Scholz during the new LNG terminal inauguration day

The ship has already been stocked with gas from Nigeria that could supply 50,000 homes for a year, and the terminal is set to begin deliveries on 22 December.

Germany plans to open four more government-funded LNG terminals over the next few months as well as a private terminal in the port of Lubmin.

Together, the terminals could deliver 30 billion cubic metres of gas a year from next year, or a third of Germany's total gas needs - if Berlin can find enough LNG to service them.

LNG terminals allow for the import by sea of natural gas which has been chilled and turned into a liquid to make it easier to transport.

The FRSU stocks the LNG, then turns it back into a ready-to-use gas.

Until now, Germany had no LNG terminals and relied on cheap gas delivered through pipelines from Russia for 55% of its supply.

Supply worries

But since Russia's invasion of Ukraine, gas supplies to Germany have been throttled and Berlin has been forced to rely on LNG processed by Belgian, French and Dutch ports, paying a premium for transport costs.

The government decided to invest in building its own LNG terminals as quickly as possible and has spent billions of euros on hiring FSRUs to service them.

However, Germany has not yet signed a single major long-term contract to begin filling the terminals from January.

"The import capacity is there. But what worries me are the deliveries," Johan Lilliestam, a researcher at the University of Potsdam, told AFP.

A contract has been signed with Qatar for LNG to supply the Wilhelmshaven terminal but deliveries are not set to begin until 2026.

Suppliers want long-term contracts, while the German government is not keen to be locked into multi-year gas deals as it wants the country to become climate-neutral by 2045.

"Companies need to know that the purchasing side in Germany will eventually diminish if we want to meet climate protection targets," economy minister Robert Habeck has said.

Environmental campaigners have criticised the LNG project, with the DUH association announcing it will take legal action. A handful of protesters turned out in Wilhelmshaven with placards demanding an "End to gas".

Cold winter

Germany could initially be forced to buy LNG from the expensive spot markets, which would lead to higher prices for consumers.

The market could also be squeezed next year by renewed demand in China as it emerges from strict Covid-19 curbs, Andreas Schroeder, an expert at the ICIS energy research institute, told AFP.

"If Europe has been able to receive so much LNG in recent months, it is because Chinese demand was low," Mr Schroeder said.

China recently signed a deal to buy gas from Qatar for 27 years - the longest such deal in history, according to Doha.

Germany has also had a cold winter so far, meaning the gas tanks have been emptying faster than expected.

"Gas consumption is increasing. This is a risk, especially if the cold spell continues," said Klaus Mueller, the head of the country's Federal Network Agency regulatory body, in a recent interview.

As a result, there is a real risk that Germany could experience temporary supply disruptions next winter, according to Mr Schroeder.

Gas usage is currently down 13% compared to last year but the government wants that figure to be closer to 20%.

In Europe, the gap between supply and demand could reach 27 billion cubic metres (950 billion cubic feet) in 2023, according to an IEA report - equivalent to 6.5% of the European Union's annual consumption.

Freeport LNG Returns To Full Power

By Tsvetana Paraskova - Mar 30, 2023, 

• The Freeport LNG export facility appears to be back at full power, with the plant pulling as much natural gas as possible from pipelines.
• 
  
• Freeport LNG was shut down in June last year when a fire broke out at the plant and its return was delayed.
• 
  
• The full return of Freeport will help to ease concerns over LNG supply to Europe, with the plant accounting for 20% of U.S. exports before its shutdown.

The Freeport LNG export facility in Texas is receiving natural gas from pipelines at full capacity, suggesting that the liquefaction operations are back to full power, Reuters reported on Thursday, citing data from data provider Refinitiv.   

The Freeport LNG export facility in Texas was shut down in June last year when a fire broke out and damaged the plant.

Two of the three trains at Freeport LNG have resumed full commercial operations in recent weeks after receiving regulatory approval in February.  

The third and final train at the Freeport LNG facility received regulatory approvals from the Federal Energy Regulatory Commission (FERC) and the Pipeline and Hazardous Materials Safety Administration (PHMSA) in early March.

By then, the other two trains had returned to full commercial operation, reaching production levels in excess of 1.5 billion cubic feet per day (Bcf/d), Freeport LNG, the company operating the export facility, said early this month.

At the end of this month, data on natural gas flows suggest that Freeport LNG is back to full operations.

According to Refinitiv data, quoted by Reuters, natural gas flows from pipelines to Freeport LNG were on track to rise to 2.1 Bcf/d on Thursday, up from 1.8 Bcf/d on Wednesday. That’s as much natural gas as all three trains at Freeport can process into LNG.

Until it was forced to shut down due to the fire in June, Freeport, responsible for some 20% of total LNG exports from the United States and generating $35 billion in revenue during the first nine months of 2022, served Europe well as the continent looked to squelch a growing energy crisis this winter.

The return of Freeport LNG is set to further ease concerns about LNG supply in Europe, which has managed its gas supply and demand well this winter, mostly due to long periods of mild weather and lower consumption because of demand destruction in the industry and energy savings from households.  

By Tsvetana Paraskova for Oilprice.com

As natural gas expands in Gulf, residents fear rising damage



LAKE CHARLES, Louisiana (AP) — The front lawn of Lydia Larce’s home is strewn with debris: Remnants of cabinets and chunks of pink shower marble lie between dumpsters. She lives in a FEMA trailer out back, her home in shambles more than a year after Hurricane Laura tore through Lake Charles.



Larce, like many in Southwest Louisiana, has what she calls “storm PTSD.” Tornado warnings trigger anxiety. She fidgets and struggles to sleep.

"The fear and the unknown — it has me on an edge,” Larce said. “I’m scared.”

A string of devastating hurricanes has torn through this region in recent years. Nationally, too, there have been more Category 4 and 5 hurricane landfalls in the past five years than in the previous 50 years combined. Larce and her neighbors know they are on the front lines of climate change.

Her region is now the epicenter of a trend that she fears will make those disasters even more destructive.

Developers plan to build a series of liquefied natural gas export facilities across Southwest Louisiana, already the heart of the industry. Even in a state with a heavy industrial base, these facilities are among the largest emitters of greenhouse gases in Louisiana.

“They’re an absolute powerhouse for greenhouse gas emissions,” said Naomi Yoder, a staff scientist at Healthy Gulf, a nonprofit that advocates for clean energy. That’s because these export facilities tend to burn off, or flare, natural gas.

Greenhouse gases are raising global temperatures and fueling extreme weather, from wildfires to violent storms like the ones that have pummeled Larce’s hometown.

“We all are living in chaos," Larce said.

For a while, it looked as though an era of steadily expanding fossil fuel facilities might be ending. Last year, after taking office, President Joseph Biden announced his intention to fight climate change by eliminating fossil fuels from electricity generation by 2035 and by sharply reducing emissions from the rest of the economy.

Yet since Biden became president, the U.S. has become the world’s largest exporter of liquefied natural gas as demand for the fuel, known as LNG, has escalated.

Russia’s invasion of Ukraine suddenly intensified the push. It heightened demand for natural gas, especially for countries in Europe that relied on Russian energy but now need to cut those ties.

Seizing the opportunity, the natural gas industry promoted U.S.-produced LNG as a way to fill the gaps, and prices for the fuel have skyrocketed. American terminals are now exporting gas at full capacity, which is why the expansion of the terminals has accelerated.

It is along the Gulf Coast, in a line from Louisiana to Texas, where the new and proposed export terminals are clustered. Talk to some locals and government officials and you'll hear unqualified support for the facilities in this battered region.

“It’s a significant boon to our economy, because it provides good, high-paying jobs,” said Eric Tarver, a member of the Calcasieu Parish School Board and chief financial officer of Lake Charles Toyota. “More than that, it’s a tremendous amount of tax revenue that just dwarfs what we’ve had from any other industry.”

But some long-time residents — often the ones who've lost the most to the storms — dispute those claims, saying that few of those coveted jobs end up going to people who grew up in the region.

REGION IN DISTRESS

Scattered across the neighborhoods of Lake Charles, blue tarps cover dozens of dilapidated roofs. Bungalows, pockmarked by gaping holes, are marred by broken siding and boarded-up windows — evidence of the damage inflicted by Hurricanes Laura and Delta more than a year ago. Yet with few other options, some residents are living here under the tarps.

“I feel Southwest Louisiana has been made a sacrificial lamb,” said Roishetta Ozane, a single mother of six and an organizer for Healthy Gulf.

An outspoken critic of the expansion of LNG facilities, Ozane warns her neighbors that the emissions worsen global warming and violent storms and impair their community's air quality. She has raised money, organized food drives and helped neighbors navigate government agencies to obtain relief after disasters hit.

“Now is the time to get people’s attention, to open their eyes that climate change is real,” Ozane said. “They’re going to continue to bring these facilities here. We’ve already had these major hurricanes here. Where are we going to live?”

As she drives around a predominantly Black area of Lake Charles, past shuttered businesses and crumbling homes, Ozane's phone buzzes with requests for help.

“Are you living in a FEMA trailer?” she asks one caller. “Text me what you need.”

There are other helpers here. Cindy Robertson is one of them. In her front yard bursting with daisies and ferns, she refills a pantry box that she stocks each morning to help feed homeless neighbors. By mid-afternoon, it’s nearly empty.

Her neighborhood has endured seven federally declared disasters in two years, and she's grown increasingly concerned, even though her family worked in coal mining. Robertson, 62, runs a nonprofit to help vulnerable people recover.

From her house, with its seascape paintings and tapestries, she provides water, sleeping bags and tents. With a succession of LNG terminals opening around her, she worries that her region hasn't yet seen the worst.

“The more we have more pollution from greenhouse gases," she fears, “the worse our storms are going to get.”

A few miles away, Cameron LNG began exporting LNG in 2019. Further south, Venture Global Calcasieu Pass is shipping its first loads.

Still another LNG company, Driftwood, recently broke ground to build an export facility. That’s on top of more than a dozen oil, gas and chemical processing plants surrounding her community.

Robertson would much prefer increased investment in renewable energy, in line with Biden's stated priorities when he took office.

“Instead of focusing on LNG, expanding what they already have... we need to take all that brainpower and all that money and put it into expanding our renewable resources,” Robertson said.

EXPORTS SURGING

The use of wind, solar and other renewable energy has grown as prices of solar components and wind turbines have plunged. But so has the world’s thirst for natural gas. In February, the U.S. exported 317 billion cubic feet of liquefied natural gas — six times times the amount five years earlier.

Investment in LNG terminals catapulted from nothing in 2011, before the U.S. export industry existed, to $63 billion over the next decade, according to Rystad Energy. The firm projects that investment could swell an additional $100 billion over the next two decades.

That's despite warnings from the United Nations Intergovernmental Panel on Climate Change that emissions from existing fossil fuel infrastructure alone would cause global warming to exceed 1.5 degrees Celsius (2.7 Fahrenheit) — a level that scientists say would bring dangerous consequences.

Of the eight terminals now exporting LNG, five lie on the coast of Louisiana and Texas. At least 16 more plus four expansions are proposed or under construction, nearly all along that same stretch of Gulf coastline.

The projects are backed by Exxon Mobil, Qatar Energy, Total Energies and numerous other global energy giants. Financing for several proposed plants comes from BlackRock, Vanguard and Mitsubishi, according to Global Energy Monitor.

At Cameron LNG in Hackberry, Louisiana, storage tanks loom over the wetlands next to rows of intersecting pipes. There, gas is treated to remove impurities. Then it's cooled to a liquid at minus 260 degrees Fahrenheit to flow onto ships. In a narrow channel, a huge French vessel called LNG Endeavor, escorted by tug boats, heads for the facility, dwarfing the homes it passes.

“We’re delivering a cleaner, more environmentally friendly fuel,” said Charlie Riedl, executive director of the Center for LNG, the industry's lobbying group. “The U.S. can use that to help defuse some of the geopolitical issues around the world by delivering a reliable fuel source.”

Initially, Biden's administration held off on approving requests that would expand the LNG industry. But after the war in Ukraine began, the Energy Department allowed some facilities to upgrade, increasing how much they could produce.

“The U.S. is exporting every molecule of liquefied natural gas that we can to alleviate supply issues in Europe,” Energy Secretary Jennifer Granholm said in March, urging the oil and gas industry to ramp up production.

Asked whether boosting fossil fuel exports contradicts Biden's climate goals, Granholm told The Associated Press “we have got to do both." She said she believes the United States can help its allies, reduce the cost of fuel and transition to more sustainable options.

Since the war increased the need for alternatives to Russian gas, some European LNG import projects that had stalled are being revived, said Emily McClain, a vice president at Rystad.

“It’s really showing we’re not quite ready to table gas and move to cleaner or greener energies,” McClain said.

Riedl said he would like the administration to do even more, by approving any of the proposed LNG export terminals.

Louisiana offers a property tax break of up to 10 years to companies that build LNG terminals. Even with those tax breaks, the increased property tax income provides a windfall for the area, said Tarver, the school board member.

With Driftwood LNG beginning construction of a facility, the expected jobs are a “shot in the arm after a devastating series of disasters,” Tarver said. That the world is looking to the Gulf Coast as an energy supplier is, he said, a source of pride.

“That’s a very powerful thing to us locally, just because we’re big Pro-America, proud American people here," Tarver said.

Others, like Ozane, argue that the tax breaks give away too much.

“We have a big homelessness problem," Ozane said. "Our schools look horrible. If LNG is doing so much for the state, why is it like that?”

CLEANER THAN COAL?

Down the road from Cameron LNG, a new export terminal has opened about a mile from John Allaire’s beachfront home. His property, where he's lived in an RV for 17 years since Hurricane Rita washed away his bunk house, is a refuge for spawning shrimp and diving sea birds. When his children were young, Allaire brought them fishing and hunting there.

At sunrise, the dark sky begins to crack into shades of orange and gray. A bright orb on the horizon looks like the rising sun. It’s not. It’s a flare from Venture Global’s Calcasieu Pass LNG, the latest export terminal to open. The flare, a mixture of flames and smoke that pours out when the facility burns natural gas, had been burning non-stop for a week, Allaire said.

“That’s pure profit and pollution going up the stack,” he said.

Allaire, 66, a retired environmental engineer for an oil company, doesn't oppose oil and gas use. His property sits on a former oilfield.

But he fears the destruction of the wetlands he loves: The soft waving cordgrass where black rails hide, the pelicans diving down over the lapping water to catch fish.

Commonwealth LNG has proposed another export terminal, sandwiched between Allaire's yard and the LNG terminal that just opened. It would cover about half the ponds that are packed with blue crabs and mud minnows.

“I’m glad there’s still places like this left — I really don’t want to see it paved over,” Allaire said.

The wetlands he loves play a beneficial role for climate, too. They absorb carbon dioxide. And they provide a buffer from storm surges.

Together, the four LNG export terminals on the Gulf Coast emitted nearly 10 million metric tons of carbon dioxide equivalent in 2020 — comparable to all of Costa Rica, according to the Global Carbon Project.

The LNG plants are tied to climate change in another way, too. Along the whole pathway to export, from the wells where companies drill to the ships getting loaded with LNG, methane — the powerful greenhouse gas that's the primary ingredient of natural gas — can escape.

And it does, from leaky wells, pipelines, compressors and storage tanks. In the Permian Basin, one of the world's richest oil and gas fields, well heads and pipelines are leaking far more methane than previously thought, according to a study that concluded that 9% of the gas produced in New Mexico's side of the basin is leaking.

“That's a shocking leakage estimate,” Rob Jackson, a professor of earth system science at Stanford University and chairman of the Global Carbon Project, an international research group, said about natural gas.

At that that rate, he said, the leaking methane alone is warming the climate more than the carbon dioxide that would be released if all the produced natural gas were burned.

Natural gas proponents say it's better for the climate than burning coal, because it releases fewer emissions when burned. But gas isn’t substituting for coal in most places, Jackson noted. Instead, as energy demand grows globally, natural gas is being used in addition to coal and other sources.

According to projections by the Energy Information Administration, natural gas use will drive an overall increase in greenhouse gas emissions in the U.S. from 2037 to 2050 as the nation’s population and its reliance on gas grow.

To show it's trying to limit its environmental impact, Cameron LNG reduced its emissions by 10% from 2020 to 2021. It's also built 500 acres of tidal marsh, using material it digs up when dredging the canal.

But residents who are enduring the trauma of relentless storms know any facility that adds emissions to the atmosphere magnifies the likelihood of destruction in vulnerable communities.

“In building more LNG export terminals," Jackson said, “we’re locking in emissions for decades to come.”

______

Associated Press journalists Janet McConnaughey in New Orleans and Rhonda Shafner in New York contributed to this report.

Associated Press climate and environmental coverage receives support from several private foundations. See more about AP’s climate initiative here. The AP is solely responsible for all content.

Cathy Bussewitz And Martha Irvine, The Associated Press

ALTERNATIVE FUELS

Estonia Proceeds with Innovative Hydrogen-Electric RoPax Ferry

Estonia is seeking construction proposals after receiving design approval from Lloyd's Register (Estonian State Fleet)

PUBLISHED FEB 6, 2024 9:16 PM BY THE MARITIME EXECUTIVE

 

 

Estonian State Fleet, the national ferry operator, is moving forward with one of the most innovative ferry designs seeking to launch in 2026 one of the largest hydrogen-fueled, electric RoPax ferries. The design project began in 2021 and recently they concluded a tender for the shipyard to construct the vessel.

Designs for the zero-emission ferry were developed working with Finnish ship design and engineering firm Deltamarin. Lloyd’s Register reviewed and certified the design approving the current state of the design process to be suitable for further design, construction, and procurement of the RoPax ferry. The design was awarded Approval in Principle by LR last November and Estonian State Fleet immediately moved into the construction tender. Proposals were due by January 17, and they are expected to shortly announce the winner.

According to Andres Laasma, Director General of the Estonian State Fleet, great attention was paid to energy efficiency when designing the innovative ferry. The propulsion system calls for a fully electric drive that will be able to operate either from batteries charged while the vessel is docked or from hydrogen-fueled power cells.

"What makes the ferry special is the way it uses green energy and the technology of energy storage and release into electrical energy," says Laasma. "Thanks to updated technologies and a new hull design, the energy consumption of the new ferry is almost 20 percent lower compared to the previous generation ferries."

Lloyd's Register approved the design to proceed toward construction in November 2023 (LR)

 

He notes that the ferry which will have a little over 1,000 linear meters for cars, will be able to operate in Estonian ice conditions with lower energy consumption. It will also provide approximately 20 percent more space than previous generations of ferries. It will be able to accommodate nearly 200 passenger cars or for example a mix with 16 large trucks and 50 passenger cars. While being highly energy efficient, it will also increase passenger comfort with the ability to accommodate 700 people and provide a lounge area and restaurant with an onboard galley. There are also cabin spaces for the crew.

“The Estonian State Fleet is committed to leading the way in innovation within its sector,” said Laasma. “To achieve this, we have undertaken a project to develop a passenger ship with a remarkably high level of autonomy. Despite the challenges involved in this complex endeavor, including regulatory hurdles, technological risks, and significant initial investments, the potential benefits are considerable.”

The new ferry will be highly efficient and designed to take advantage of future developments. This includes systems for automatic movement and decision support. In the future, it will be able to operate fully autonomously handling functions including docking and mooring. It is also designed to be ready for remote operations.

Plans call for the ferry to connect the Estonian mainland with its two largest islands, Saaremaa and Hiiumaa. The company expects to spend approximately €40 million with the shipbuilding financed by the European Modernization Fund and CO2 quota fee revenue. The tender specifies the vessel should enter service on October 1, 2026.

NYK Repowers Japan's First LNG-Powered Tug to Run On Ammonia Instead

Sakigake, Japan's first LNG dual fuel tug, at delivery in 2015 (NYK)

PUBLISHED FEB 5, 2024 4:45 PM BY THE MARITIME EXECUTIVE

 

Japanese shipowner NYK has taken delivery of an ammonia-fueled engine for use in a tug application, and it is tearing out the LNG dual-fuel engine of Japan's first LNG-powered tug to make a testbed. 

The tug Sakigake was the first LNG-fueled vessel of its kind in Japan. With support from the Japanese government, it was constructed by NYK's Keihin Dock Co. and delivered to NYK in mid-2015, and it was put into service in Tokyo Bay. At the time, it was considered a technical achievement, since fitting a complete LNG fuel storage and delivery system into the small hull of a tug is a difficult feat of marine engineering. 

For the new conversion, Keihin Dock Co. is cutting into the tug's engine room to remove the existing LNG-powered main engine. It will install a new ammonia-powered engine, supplied by IHI Power Systems, and the tug will be returned to service in June. 

IHI Power Systems’ Ota Plant began testing the 280mm-bore, four-stroke ammonia engine in April 2023. It is designed to run on 20 percent diesel / 80 percent ammonia, and it is paired with exhaust aftertreatment to eliminate unwanted nitrogen-based emissions from ammonia combustion. In particular, the testing verified near-zero emissions of dinitrogen monoxide (N2O) and unburnt ammonia. 

A parallel project aims to adapt the technology to a 250mm-bore engine for use on an auxiliary engine, which will be installed aboard an ammonia-fueled ammonia carrier, currently under development for delivery in 2026. 

IHI is developing a range of engines powered by ammonia, from diesel-cycle internal combustion engines up to gas turbines for powerplant applications. In 2022, it achieved the first trial run of a gas turbine on 100 percent pure ammonia. It is working on a commercialized version of the turbine system for sale by next year. 

In years to come, Japan is expected to draw down 20 million tonnes of green ammonia per year for consumption in its coal-fired powerplants, creating immense demand for the green hydrogen-derived fuel from a nascent global market.  

Evergreen and X-Press to Launch Methanol-Fueled Feeder Service

Eco Maestro, one of X-Press Feeders' new boxships, goes down the ways (X-Press Feeders)

PUBLISHED FEB 5, 2024 8:01 PM BY THE MARITIME EXECUTIVE

 

Taiwan's Evergreen Marine has reached an agreement with X-Press Feeders to acquire capacity on X-Press' new methanol dual-fuel boxships within the European market, where carbon emissions regulations are tighter than anywhere else. 

Evergreen is a key customer of X-Press, and the new deal will help underpin the new methanol-powered container service in Europe. In 2021, X-Press Feeders ordered 16 dual-fuel methanol boxships from New Dayang Shipbuilding and Ningbo Xinle Shipbuilding, following the lead set by Maersk. The world's first operating dual-fuel methanol boxship is also a feeder, the Laura Maersk, which will also operate in the European market. 

X-Press' dual-fuel methanol fleet will begin operation out of Rotterdam later this year, with Evergreen's support. The network will cover destinations in the Baltic and in Scandinavia. Ultimately the line will have 14 of the vessels operating in the region, including both northern Europe and the Mediterranean. 

The fuel will be bio-methanol supplied by OCI Global, and it will be certified to International Sustainability and Carbon Certification standards for green fuel. The feedstock for fuel production will come from decomposition of organic waste and residues, according to Evergreen. 

X-Press Feeders has pledged to achieve net-zero emissions by 2050, in line with the IMO's current ambitions. 

“We are pioneering the use of dual-fuel vessels and we decided to take delivery of our vessels sooner, rather than later, because we know we need to take significant steps today to meet the targets for reductions in GHG emissions,” said Francis Goh, X-Press Feeders’ Chief Operating Officer.

Matson Proceeding with Third LNG Conversion for its Containerships

Shipyard has been contracted for the conversion of the Kaimana Hila to dual-fuel LNG operations (Matson)

PUBLISHED FEB 6, 2024 3:14 PM BY THE MARITIME EXECUTIVE

 

Matson is proceeding with its plans to convert three of its containerships to dual-fuel LNG operations. China’s COSCO Shipping Shipyard (Nantong) reports it signed a contract with Matson for the third step in the conversion program, the retrofit of the 2019-built vessel Kaimana Hila. 

The project was first announced in 2022 when Matson contracted with MAN PrimeServ for the conversion of the first ship of the Aloha Class, the Daniel K. Inouye, which had been built in 2018. The two sisterships are 50,000 dwt containerships measuring 841 feet in length and with a capacity for 3,800 TEU.

Matson noted that the sisterships along with the later sisterships Lurline and Matsonia were all outfitted with LNG-capable dual-fuel engines in anticipation of their eventual conversion. However, at the time the ships were introduced, they noted that commercial supplies of LNG were not yet available in its network.

Details on the project and its timing were not announced, but Matson previously said it would begin in the second quarter of 2024 and is scheduled to be back in service by year-end. It is being coordinated with the retrofit of a third Matson vessel, the Manukai (29,500 dwt and 2,370 TEU). Built in 2003, the vessel arrived last August in Nantong for a more extensive renovation project that involved replacing her main engine as well as the installation of LNG tanks and the systems. She is due to return to service this summer.

MAN PrimeServ reported in March 2023 that Matson had taken up the option for the conversion of the Kaimana Hila. MAN noted that the dual-fuel conversion provides fuel flexibility to take advantage of optimal fuel prices while the vessels can also comply with IMO emission targets and extend their operational lifetimes.

The conversion of the Kaimana Hila will be similar to the work carried out in the first half of 2023 on the Daniel K. Inouye, which involved the fitting of three LNG tanks, which was completed in March 2023, as well as the gas supply and control systems, associated piping and other conversion equipment, which was due to be completed by June 2023. Matson estimated that the conversion of each of the Aloha Class vessels was costing approximately $35 million. 

After completing the conversion, the Daniel K. Inouye was initially fueled in Long Beach, California in a truck-to-ship operation. The first operational LNG bunkering took place on September 4 loading nearly 1,400 cubic meters of LNG.

Matson and CNOOC Zhejiang New Energy Co. in October 2023 entered into an LNG supply agreement. It was the first international ship LNG bunkering fixed-term contract of CNOOC and followed by the first LNG ship-to-ship bunkering of 759 tons of LNG performed at the Meishan in the Ningbo port complex for the Daniel K. Inouye. CNOOC will be supplying the LNG for the Matson ships operating between the United States and China.

Matson has also ordered the construction of three new 3,600 TEU Aloha Class containerships which will be delivered LNG-ready. They are to be built at Philly Shipyard for delivery in 2026 and 2027. The company at last report was also considering LNG retrofitting projects for the Kanaloa Class vessels, Lurline and Matsonia. Matson is investing nearly $1 billion for the three conversions and another $1 billion to build the three new vessels.

European Ethanol Producers File Challenge to FuelEU Maritime Regulation

Ehtanol producers are challenges the FuelEU Maritime regulation (istock)

PUBLISHED FEB 1, 2024 7:01 PM BY THE MARITIME EXECUTIVE

 

An industry group representing European ethanol producers launched a legal challenge they announced yesterday seeking to at least partially annul the FuelEU Maritime Regulation saying that it improperly addresses sustainable biofuels such as renewable ethanol. In a filing made last month to the General Court of the European Union they argue the maritime regulations due to go into effect in 2025 failed to properly reflect the EU’s Renewable Energy Directive and if permitted to proceed would jeopardize the EU efforts in biofuels.

The efforts to extend the FuelEU regulations to the maritime and aviation industries were a long and hard-fought battle with a political agreement finally reached in March 2023. The shipping industry won some key concessions but starting in 2025 the regulations move to aggressively reduce carbon emissions through a series of step down between next year and 2025. It includes provisions for e-fuels but there were also concerns about creating competition with the food supply.

The filing argues that the FuelEU Maritime Regulation fails to properly recognize the proven benefits of sustainable crop-based biofuels and has therefore violated several key EU legislative procedures. They are saying that the regulation excludes Renewable Energy Directive (RED)-compliant crop-based biofuels from the decarbonization objectives of the maritime sector.

“The EU’s patchwork approach to crop-based renewable ethanol – confirming its sustainability and importance in the Renewable Energy Directive but sidelining it in FuelEU Maritime and RefuelEU Aviation – is more than just discriminatory,” said David Carpintero, Director General of ePURE, the European renewable ethanol association. “It also jeopardizes the EU’s ability to meet ambitious decarbonization targets,” he argues.

The legal action is based on several arguments, including among others that the European Parliament and the Council “committed a manifest error of assessment by failing to rely on scientific and technical data in preparing their policy on the environment.” The argument contends that the policymakers violated the principle of proportionality by considering that RED-compliant crop-based biofuels have the same emission factors as the least favorable fossil fuel in maritime transport. The regulation as written they argue violated the principle of equal treatment because the methodology used to calculate GHG intensity of the energy used on board ships is not consistent with the RED's biofuel GHG emission calculation.

The lobbyists are asking the court to annul the portions of the regulation that they contend fail to properly reflect the Renewable Energy Directive.  

If the FuelEU Maritime regulation is permitted to proceed as written, they are arguing the EU would be discouraging domestic renewable fuel production. One producer, agribusiness Pannonia, and its subsidiary ClonBio Group are calling the policymaking “irresponsible” and “unstable,” saying they are pursuing investments in the U.S. instead. They argue that the EU will be left behind when the global maritime and aviation markets harmonize around solutions such as sustainable crop-based biofuels because of the failure of the FuelEU regulations.