G7 Plans To Back New Natural Gas Investments

By Charles Kennedy - Apr 06, 2023

With global energy markets upended, the G7 group of the world’s most industrialized nations is considering endorsing new upstream investment in natural gas despite climate concerns, a draft document seen by Reuters showed on Thursday.   

The energy and climate change ministers of the G7 members—Canada, France, Germany, Italy, Japan, the UK, and the U.S.—are holding a summit in Japan next week, at which they are expected to discuss ways to reduce emissions in the face of more pressing energy security issues.

According to the draft document, the ministers will say that new upstream investment in natural gas supply will be needed to address energy security after the Russian invasion of Ukraine.

“In this context, in this particular contingency, we recognize the need for necessary upstream investments in LNG (liquefied natural gas) and natural gas in line with our climate objectives and commitments,” reads the draft statement seen by Reuters.

The draft is not the final draft of the communique to be adopted and could still change until the summit, which Japan will host on April 15 and 16.

Major European economies, including the biggest, Germany, have seen first-hand the need for natural gas supply that’s not coming via pipelines from Russia. The U.S. has been sending record volumes of LNG to Europe over the past year as prices surged following the Russian invasion of Ukraine and as the U.S. pledged to help its European allies with gas deliveries.

Despite protests from environmentalists, many governments and policymakers have recognized the need to ensure a reliable and stable gas supply.

The World Bank could now be open to funding some gas projects, although it had pledged that it would stop funding upstream oil and gas projects after 2019.

The World Bank could be open to funding gas projects in Mozambique to ensure greater energy access if the costs are the cheapest among energy sources, Victoria Kwakwa, World Bank Vice President for Eastern and Southern Africa, told Bloomberg in an interview last month.

Back in 2017, the World Bank Group said it would no longer finance upstream oil and gas after 2019. But the group noted that “In exceptional circumstances, consideration will be given to financing upstream gas in the poorest countries where there is a clear benefit in terms of energy access for the poor and the project fits within the countries’ Paris Agreement commitments.”

How The U.S. Became A Natural Gas Giant

By Alex Kimani - Apr 04, 2023

• From a position of relative obscurity less than a decade ago, U.S. natural gas and liquefied natural gas (LNG) export capacity has expanded rapidly since the Lower 48 states first began exporting LNG in 2016.
• 
  
• The U.S. now exports LNG to 40 countries across the globe.
• 
  
• The United States has the world’s largest backlog of near-shovel-ready liquefied natural gas projects, and takeaway capacity remains a bottleneck.

How The U.S. Became A Natural Gas Giant

From a position of relative obscurity less than a decade ago, U.S. natural gas and liquefied natural gas (LNG) export capacity has expanded rapidly since the Lower 48 states first began exporting LNG in 2016. Last year, the United States achieved an important milestone after becoming the world's biggest LNG exporter, surpassing Qatar and Australia as Europe scrambled to replace Russian gas. This was made possible after LNG liquefaction units, called trains, at Sabine Pass and Calcasieu Pass in Louisiana came online last year.

Last year, U.S. exports of liquefied natural gas (LNG) averaged 10.6 billion cubic feet per day (Bcf/d) , increasing by 9% (0.8 Bcf/d) compared with 2021. LNG exports to Europe increased a torrid 141% clip, or 4.0 Bcf/d, compared with 2021.  Europe has become the primary destination for U.S. LNG exports, accounting for 64% (6.8 Bcf/d) of total exports in 2022. Just four countries— the U.K., France, Spain, and the Netherlands–accounted for nearly three quarters of LNG exports to Europe. Europe was able to avoid a gas shortage crisis this winter thanks to high LNG imports.

That’s a really strange turn of events considering that a decade and a half ago, before the shale revolution was a thing, the United States was widely expected to become a key LNG importer, likely dependent on the Middle East, Russia and North African. But then, the shale revolution happened, leading to a massive increase in gas output through the use of horizontal drilling and hydraulic fracturing to extract hydrocarbons trapped in shale rocks. After a decade of dramatic growth and rapid expansion of LNG export facilities, the country began exporting LNG from the Lower 48 states in February 2016.

The U.S. now exports LNG to 40 countries across the globe.

To secure supplies, customers have been signing long-term deals with U.S. producers at a record clip. Last year, the volume of long-term LNG contracts signed to end-user markets climbed to a 5-year high, and the momentum remains strong.

Last year, LNG giant Cheniere Energy Inc.(NYSE: LNG) revealed that it’s had the most active year for contracting since 2011.

Louisiana-based LNG company Sempra Infrastructure, a majority owned subsidiary of Sempra Energy (NYSE: SRE) (BMV: SRE), inked six long-term contracts in the space of just five months. The deal calls for Sempra Infrastructure’s Cameron LNG in Hackberry to supply 2 million metric tons of LNG annually to the Polish Oil & Gas Co. Sempra Infrastructure struck another 2 million-ton deal with Polish for its upcoming Port Arthur LNG facility in Port Arthur, Texas.

Most new contracts are from U.S. supply as operators move projects forward. All these contracts are linked to North American prices. Meanwhile, Chinese buyers continue to dominate the market, signing more than 8 million tpy of new LNG sale and purchase agreements this year. 

“The Russian invasion of Ukraine has had a dramatic impact on long-term LNG contracts. Many traditional LNG buyers will neither procure spot gas or LNG nor renew or sign additional LNG contracts with Russian sellers. Spot prices have also been high and volatile, pushing many buyers towards long-term contracts. Additionally, some buyers are returning to long-term contracting on behalf of governments to protect national energy security,” Wood Mackenzie principal analyst Daniel Toleman has said.

Pipeline Bottleneck

Unfortunately, whereas the United States has the world’s largest backlog of near-shovel-ready liquefied natural gas projects, takeaway constraints including limited pipeline capacity remain the biggest hurdle to expanding the sector.

In the Appalachian Basin, the country’s largest gas-producing region churning out more than 35 Bcf/d, environmental groups have repeatedly stopped or slowed down pipeline projects and limited further growth in the Northeast. This leaves the Permian Basin and Haynesville Shale to shoulder much of the growth forecast for LNG exports. Indeed, EQT Corp.(NYSE: EQT) CEO Toby Rice recently acknowledged that Appalachian pipeline capacity has “hit a wall.”

Related: Venezuelan Oil Exports Jumped In March

Analysts at East Daley Capital Inc. have projected that U.S. LNG exports will grow to 26.3 Bcf/d by 2030 from their current level of nearly 13 Bcf/d. For this to happen, the analysts say another 2-4 Bcf/d of takeaway capacity would need to come online between 2026 and 2030 in the Haynesville.

“This assumes significant gas growth from the Permian and other associated gas plays. Any view where oil prices take enough of a dip to slow that activity in the Permian and you’re going to have even more of a call for gas from gassier basins,” the analysts have said.

U.S. Pipeline Companies To Watch

According to FERC, four U.S. LNG projects are currently under construction, another 12 have been approved by federal regulators and four more have been proposed totaling 40 Bcf/d of potential LNG exports.

The pivotal Permian Basin is preparing to unleash a torrent of gas and gas projects to meet exploding LNG and nat. gas demand. Energy Transfer LP (NYSE: ET) is looking to build the next large pipeline to transport natural gas production from the Permian Basin. The company is also working on the Louisiana-based Gulf Run pipeline, which will transport gas from the Haynesville Shale in Texas, Arkansas, and Louisiana to the Gulf Coast.

Energy Transfer is expected to report Q2 earnings on 3rd August 2022. The consensus EPS forecast for the quarter, based on 5 analysts as per Zacks Investment Research, is $0.28 compared to $0.20 for last year’s corresponding period.

Back in May, a consortium of oil and natural gas firms namely WhiteWater Midstream LLC, EnLink Midstream (NYSE:ENLC), Devon Energy Corp. (NYSE: DVN) and MPLX LP (NYSE: MPlX) announced that they had reached a final investment decision (FID) to move forward with the construction of the Matterhorn Express Pipeline after having secured sufficient firm transportation agreements with shippers.

The Matterhorn Express Pipeline will transport up to 2.5 billion cubic feet per day of natural gas through approximately 490 miles of 42-inch pipeline from Waha, Texas, to the Katy area near Houston, Texas. Supply will be sourced from multiple upstream connections in the Permian Basin. Matterhorn is expected to be in service in the second half of 2024, pending regulatory approvals. 

WhiteWater CEO Christer Rundlof touted the company’s partnership with the three pipeline companies in developing “incremental gas transportation out of the Permian Basin as production continues to grow in West Texas.” Rundlof says Matterhorn will provide “premium market access with superior flexibility for Permian Basin shippers while playing a critical role in minimizing flared volumes.”

Matterhorn joins a growing list of pipeline projects designed to capture growing volumes of Permian supply to send to downstream markets. 

WhiteWater revealed plans to expand the Whistler Pipeline’s capacity by about 0.5 Bcf/d, to 2.5 Bcf/d, with three new compressor stations.

MPLX has several other expansion projects under construction. The company says it expects to finish construction on two processing plants this year, and recently reached a final investment decision to expand its Whistler Pipeline. 

Also in May, Kinder Morgan Inc. (NYSE: KMI) subsidiary launched an open season to gauge shipper interest in expanding the 2.0 Bcf/d Gulf Coast Express Pipeline (GCX).

Meanwhile, KMI has already completed a binding open season for the Permian Highway Pipeline (PHP), with a foundation shipper already in place for half of the planned 650 MMcf/d expansion capacity.

In an effort to increase LNG exports to the European Union to stave off an energy crisis amid Russia’s war on Ukraine, the U.S. Department of Energy has authorized additional LNG exports from the planned Golden Pass LNG Terminal in Texas and the Magnolia LNG Terminal in Louisiana. 

Jointly owned by Exxon Mobil (NYSE: XOM) and Qatar Petroleum, the $10B Golden Pass LNG export project is expected to become operational in 2024, while Magnolia LNG, owned by Glenfarne Group, will come online by 2026. The two terminals are expected to produce more than 3B cf/day of natural gas, although Magnolia is yet to sign contracts with customers. 

Previously, American LNG developers were unwilling to construct self-financed liquefaction facilities that are not secured by long-term contracts from European countries. However, the Ukraine war has exposed Europe’s soft underbelly and the harsh reality is forcing a rethink of their energy systems. To wit, Germany, Finland, Latvia, and Estonia recently expressed the desire to move forward with new LNG import terminals.

Meanwhile, the DoE has approved expanded permits for Cheniere Energy's (NYSE: LNG) Sabine Pass terminal in Louisiana and its Corpus Christi plant in Texas. The approvals allow the terminals to export the equivalent of 0.72 billion cubic feet of LNG per day to any country with which the United States does not have a free trade agreement, including all of Europe. Cheniere says the facilities already are making more gas than is covered by previous export permits.

By Alex Kimani for Oilprice.com

Maersk's Methanol Efforts Proceed with Bunkering in Singapore and US Plant

Maersk's new containership completed Singapore's first STS methanol bunkering operation (MPA)

PUBLISHED JUL 27, 2023 9:23 PM BY THE MARITIME EXECUTIVE

 

Maersk continues to forge ahead with efforts to develop methanol as an alternative fuel to support the maritime industry’s transition. The shipping company is supporting the development of a large green methanol production facility in Central Louisiana while in Singapore they completed the port’s first-ever ship-to-ship methanol bunkering operation. With its maiden voyage underway, the first containership fueled by methanol is now a little over a month away from reaching Maersk’s headquarters in Copenhagen.

Singapore’s Maritime and Port Authority (MPA) is highlighting the unique bunkering operation and the preparation it undertook. Before the operation, extensive safety preparations were made, including tabletop exercises, workshops, and a ground deployment exercise involving various stakeholders and government agencies. The MPA highlights that it conducted a thorough risk and environmental impact assessment, reviewed global methanol-related incidents, and incorporated the use of drones, weather and tide forecasting, plume modeling, and monitoring to support the operation.

The 32,300 dwt containership built in South Korea which will be officially named Laura Maersk when it reaches Copenhagen, arrived in Singapore on July 26 from Shanghai. Working with Hong Lam Marine which received the green methanol from Vopak Terminals, the vessel was refueled with approximately 300 metric tonnes of bio-methanol from the bunker vessel MT Agility. The containership will depart Singapore for the more than 5,300 nautical mile voyage to the Suez Canal.

 

Singapore undertook extensive preparations to ensure the safety of the bunkering operation (MPA)

 

As the voyage continues, Maersk also continues to build out its global supply network for the future fuel that will be required for its fleet of ocean-going methanol dual-fuel ships now on order as well as the other major carriers that have followed with orders for ships. 

SunGas Renewables, a Louisiana-based company spun out of GTI Energy to focus on renewable syngas products announced plans to proceed with the construction of a large green methanol production facility that is expected to supply methanol to Maersk’s fleet. The company plans to invest approximately $2 billion to construct the project at the former International Paper facility in Rapides Parish, Louisiana. Construction is expected to begin in late 2024 with commercial operations commencing in 2027.

“Using biomass from sustainably managed forestry along with carbon capture allows our project to generate green marine shipping fuel while simultaneously removing carbon from the atmosphere,” explains Robert Rigdon, CEO of SunGas Renewables.

The project which will be called Beaver Lake Renewable Energy is expected to produce nearly 400,000 metric tons of green methanol per year for marine fuel. It will utilize wood fiber from local, sustainably-managed forests in the production of the fuel with a carbon sequestration process of nearly a million tons per year of CO2.

In late 2022, SunGas Renewables announced a strategic green methanol partnership with Maersk to produce green methanol from multiple facilities around the United States. The BLRE project is SunGas Renewable’s first facility to produce green methanol for Maersk.

SEA-LNG Highlights Growth of Bio-LNG Bunkering

SEA-LNG highlights the growth of bio-LNG to meet shipping's demands and emerging regulations (CMA CGM file photo)

PUBLISHED JUL 27, 2023 8:26 PM BY THE MARITIME EXECUTIVE

 

SEA-LNG, the industry coalition established to demonstrate the commercial advantages of LNG as a marine fuel, is reporting strong growth in the availability of bio-LNG including in major bunkering ports. Growth of the alternative fuel is increasingly important both to support the expansion of the LNG-fueled fleet and to meet emerging regulations designed to reduce methane emissions as well as support the development of renewable fuels that do not compete with the production of food.

The European Council’s moves this week to complete the adoption of FuelEU Maritime due to become effective in 2025 highlight the critical need for bio-alternative fuels that meet the EU’s Renewable Energy Directive and requirements that fuels do not compete with food production. SEA-LNG reports that the current fleet of 355 LNG-fueled vessels, excluding LNG carriers, are all capable of using bio-LNG as a drop-in fuel without modification. DNV on its Alternative Fuels Insight platform estimates that the LNG-fueled global fleet with grown by 2.5 times in the next five years to nearly 1,000 ships.

SEA-LNG in its market analysis reports that annual production of biomethane, from which bio-LNG is produced, is currently around 30 million tonnes or around 10 percent of shipping’s total annual energy demand. Further, they report that bio-LNG is currently available in almost 70 ports worldwide, including in Singapore, Rotterdam, and the US East Coast. They highlight that bio-LNG can also be transported, stored, and bunkered in ports using the existing LNG infrastructure, which provides a route to further expansion of its availability in coming years.

“The fact that bio-LNG is commercially available now and being used as a drop-in marine fuel by operators in Europe, North America, and Asia, demonstrates the sustained contribution that the LNG pathway can make to decarbonizing our industry, starting today,” said Adi Aggarwal, General Manager of SEA-LNG. “Climate change is a stock and flow problem, the longer our industry waits to start using low-carbon fuels, the tougher the decarbonization challenge will be.”

Bio-LNG used in the maritime industry is produced from sustainable biomass feedstocks such as human or agricultural waste, which means it does not compete with the production of food, fiber, or fodder, as defined by regulations such as the EU’s RED II and the Renewable Fuel Standards in America. SEA-LNG highlights that in general, the use of bio-LNG as a marine fuel can reduce GHG emissions by up to 80 percent compared to marine diesel on a full well-to-wake basis. They further contend that depending on the method of production, bio-LNG can have net-zero or even net-negative GHG emissions on a lifecycle basis.

Environmentalists have been critical of the growth of the LNG fleet pointing to methane slip, the condition where unburnt methane which is especially harmful to the environment is contained in a ship’s exhaust. Global regulations, including an initiative from the UN Climate Summit, specifically are targeting methane slip at all sources from production to the use of LNG as a fuel source. SEA-LNG argues that newer marine engines and technologies are reducing methane slip while additional research is also underway to eliminate methane emissions from ship’s exhausts.

SEA-LNG also addresses the challenge of scaling up bio-methane production to meet demand. The industry coalition cites research from the Nanyang Technological University’s Maritime Energy and Sustainable Development Centre of Excellence (MESD) released in October 2022, showing the global potential for the expansion of biomethane production of up to 20 times current production levels by 2050. Accounting for demand for other sectors, MESD forecasts that bio-LNG as a marine fuel could be available in sufficient quantity to decarbonize approximately 13 percent of the global shipping fleet in 2050. 

HHI Gets Approval for Ammonia-Based Shipboard HVAC Plant

PUBLISHED JUL 27, 2023 10:57 PM BY THE MARITIME EXECUTIVE

 

ABS has issued an approval in principle to HD Hyundai Heavy Industries (HHI) for its new ammonia-based ship HVAC refrigeration system. 

Ammonia is the most common industrial refrigerant worldwide because of its excellent efficiency and affordable price. In addition, it has zero greenhouse-gas impact, unlike some modern refrigerants, and has no effect on the ozone layer. It is a common refrigerant aboard reefer ships and large fishing vessels, with decades of proven service. 

Ammonia's drawbacks are also well-known, and much discussed in the maritime industry. It is toxic and flammable, and these safety challenges have to be managed in a shipboard environment. Its long history in fishing and in shoreside applications have established its risk/benefit profile, and two research studies recently concluded that it can be used safely as a marine fuel - with the right precautions. Extending its use to merchant shipboard HVAC is a small step towards far larger ammonia-fuel systems. 

HHI developed its new ammonia refrigeration system in response to shipowners’ requests for a more eco-friendly refrigerant for HVAC, the company said in a statement. Ammonia's attractiveness for the owner is in its zero global warming potential, as well as its inherent safety for the ozone layer. Hwan-Sik Lee, head of the ship design office at HD Hyundai Heavy Industries, emphasized that HHI wants to help reduce the GHG footprint of the whole ship, not just the propulsion system. 

“This is an exciting development from HHI for the maritime industry’s decarbonization quest to find sustainable solutions. ABS has always been a safety pioneer, so we are well placed to tackle the challenges on board and ashore presented by ammonia’s toxicity and flammability. ABS is committed to leading the industry in supporting ammonia’s safe adoption at sea,” said Panos Koutsourakis, ABS Vice President, Global Sustainability.

U.S. is the Largest LNG Exporter Topping Australia and Qatar

Resumption of shipments from the Freeport LNG terminal helped the U.S. grow LNG exports in 2023 (Freeport LNG file photo)

PUBLISHED SEP 12, 2023 5:26 PM BY THE MARITIME EXECUTIVE


The United States exported more LNG than any other country in the first half of 2023 according to a new report from the U.S. Energy Information Administration (EIA). The government agency that analyzes and reports on the energy markets to inform policy decisions cited the resumption of operations at the Freeport LNG facility as one of the key contributors to the growth in exports in 2023 while numerous additional LNG projects are in the development stage primarily for the U.S. Gulf Coast.

Using data from the French not-for-profit association CEDIGAZ, which is dedicated to natural gas information, the report says U.S. exports grew by four percent in the first half of this year compared to the same period in 2022. The United States exported more liquefied natural gas (LNG) than any other country averaging 11.6 billion cubic feet per day (Bcf/d). In addition, the report highlights that U.S. LNG exports set a monthly record of 12.4 Bcf/d in April as Freeport LNG ramped up LNG production.

Freeport LNG, the second-largest LNG export terminal in the U.S., went offline after a June 2022 explosion. The plant remained offline not completing its first shipments till February 2023 while there were undertaking repairs and upgrades to systems. Management said they would be ramping up operations at least into March 2023 while longer term they are planning to add a fourth train. According to Freeport LNG management, this expansion will allow for the export of an additional 5+ mtpa of LNG, increasing Freeport LNG’s total export capability to more than 20 mtpa of LNG per year.

The U.S. has traditionally been competing with Qatar for the title of the largest exporter, but Australia edged out Qatar this year for the second position according to the data from CEDIGAZ. Australia exported the world’s second-largest volume of LNG in the first half of 2023, averaging 10.6 Bcf/d, followed by Qatar at 10.4 Bcf/d.

Similar to the patterns established in 2022, the EIA cites the strong growth in demand from Europe as the primary market for U.S. gas exports. EU countries and the UK remained the main destinations for U.S. LNG exports in 1H23, accounting for 67 percent (7.7 Bcf/d) of total U.S. exports. Five countries, the Netherlands, the UK, France, Spain, and Germany, imported more than half (6.0 Bcf/d) of total U.S. LNG exports.

European countries have been rushing to develop new import capabilities to make up for the loss of Russian gas. Germany created import facilities chartering a series of FSRUs placed both in the east and western seaports. Finland also chartered a vessel and new facilities opened in Italy and Spain, with countries including Greece working to develop their import facilities using FSRUs. Operations are beginning exports in emerging areas including Egypt and other African countries.

After a mild winter, Europe and the UK ended the 2022–23 heating season with the most natural gas in storage on record, and the region continued importing LNG to rapidly refill its storage inventories in the spring and summer.

In the first six months of this year, Europe and the UK’s LNG imports exceeded imports by pipeline for the first time on record, according to data from Refinitiv Eikon.

Demand remains strong from the European markets and with LNG exports on the rise, a record number of gas carrier vessels are now on order. The backlog to build vessels in South Korea helped China to increase orders for new LNG carriers. Rumors from South Korea indicate the three big shipbuilders are on the verge of a massive order for vessels tied to Qatar’s ongoing expansion which includes the opening of the North Field. Qatar lifted a self-imposed expansion ban in 2021. According to the International Trade Administration, the first phase of Qatar’s North Field project is expected to increase capacity by 43 percent from 77 million tons per annum (mtpa) to 110 mtpa by 2025. The second phase, called the North Field South Project, will further increase the production capacity from 110 mtpa to 126 mtpa, a total 64 percent increase by 2027.

New Study Questions LNG as a "Bridge Fuel" in Decarbonization

By Haley Zaremba - Feb 10, 2024

• President Joe Biden announced a pause on new LNG export licenses to assess their impact on domestic energy security, consumer costs, and the environment.
• 
  
• Recent studies and scientific letters argue that LNG may not be as clean as previously thought, potentially being worse for the climate than coal when considering the full lifecycle of its production and methane emissions.
• 
  
• The pause on LNG exports is contentious, with some arguing it will hinder global energy demands and environmental progress, while others see it as a necessary step towards cleaner energy alternatives.

For years, the petroleum industry has been trying to push liquefied natural gas as a clean energy source, or at least a cleaner energy source than other fossil fuels, touting its role as a stepping stone or ‘bridge fuel’ between higher-emissions fuels and clean energy in the decarbonization transition. But recent research shows that LNG may not always be cleaner than coal, the dirtiest fossil fuel. 

The debate over whether LNG is in reality a cleaner alternative to other fossil fuels has been reengaged in recent months as the Biden administration has announced that it will pause approvals of new licenses to export liquefied natural gas. Last Friday, President Joe Biden announced that during this freeze the United States Department of Energy will review and assess whether the nation’s considerable LNG exports are “undermining domestic energy security, raising consumer costs and damaging the environment.”

This pause will have widespread implications for global energy markets, as the United States was the single biggest exporter of liquefied natural gas in the world in 2023. According to LSEG data, full year exports from the U.S. rose 14.7% to 88.9 million metric tons (MT), but from 77.5 million metric tons in 2022. 

As the Biden administration's decision to pause new approvals makes waves around global energy markets, it’s also caused a major resurgence of the natural gas debate in scientific circles. We now know that natural gas is much more harmful for the environment than initially thought, but there is widespread disagreement about to what extent, and whether pausing exports is actually the right move for the environment. 

In December 2023, 170 climate scientists signed onto a letter petitioning President Joe Biden to reject all plans to build more LNG export terminals going forward, and especially along the Gulf of Mexico. Their argument was based on the finding that, in stark contrast to the dominant energy transition narrative, liquefied gas is actually “at least 24 percent worse for the climate than coal.” This figure comes from a  forthcoming Cornell University study (which has not yet been peer reviewed). 

The issue is not really the consumption of the natural gas itself, but emissions associated with the life cycle of liquefied natural gas production. The Cornell University figure comes from figuring in the carbon dioxide emissions that result from the liquefying process, which requires chilling natural gas to extremely cold temperatures, an energy-intensive ordeal. 

Another major issue is the methane that is released during the extraction of natural gas. Methane is an extremely potent greenhouse gas. While it breaks up much more quickly in the atmosphere than carbon dioxide, it is 80 times more potent at warming than CO2 over a 20-year period. And peer–reviewed studies (like this one, this one, and this one) are increasingly indicating that natural gas produces much, much more methane over its life cycle than previously thought. 

But other experts contend that these figures, while peer-reviewed, are politically motivated and the figures are inflated or skewed to tell a certain narrative that’s not necessarily consistent with reality. “It's just extremely frustrating to even deal with claims like this, because we talk about settled science,” says Dan Byers, vice president of policy at the U.S. Chamber of Commerce, where he works on environmental issues in a recent Scientific American report. “The notion that, you know, LNG and natural gas reduce emissions by displacing coal is completely well established. So it feels like we’ve got like a flat earth situation going on with these claims.”

A recent op-ed in the Wall Street Journal goes as far as to contend that the Biden administration’s new LNG export pause will actually harm the environment more than it helps. In the op-ed Chris Barnard, president of the American Conservation Coalition, argues that if the United States takes a step back from meeting global energy demands, other energy powers including Russia and China will only be too happy to fill those shoes. He argues that the result will be a more volatile geopolitical landscape as well as an increase of more carbon-intensive energy sources on the market. 

As usual, the truth probably lies somewhere in the middle. But the one thing that’s certain is that regardless of whether coal or LNG is cleaner, clean energy buildout will always be the cleanest. Of course, LNG will continue to have a role in stabilizing, and yes, bridging a smooth energy transition. But the quicker we can move away from it, the better. 

By Haley Zaremba for Oilprice.com

LNG Projects Poised for Bumper Season Despite Washington Freeze

By Alex Kimani - Feb 07, 2024

• Energy Intelligence: interest in long-term LNG projects remains robust.
• 
  
• Energy Intelligence: we expect the LNG momentum to continue under the next government regardless of who wins the November presidential elections due to Biden’s commitment to U.S. allies and Trump’s pursuit of higher fossil fuel production.
• 
  
• WoodMackenzie: expect lower LNG prices in 2024.

Last week, U.S. President Joe Biden paused new licenses for LNG export projects still in the planning pipeline to give his administration time to reassess whether additional infrastructure is in the “public interest” in terms of the country’s energy security and climate goals. 

The administration has highlighted lingering fears that shipping large volumes of U.S. gas overseas could erode America’s competitive advantage of cheap energy critical for energy-intensive industries such as steelmaking and petrochemicals and also seeks to address concerns by environmental activists who have argued that the entire LNG manufacturing, delivery and consumption cycle has a much higher carbon footprint than currently touted. 

Not surprisingly, the decision has irked Republican lawmakers and rattled U.S. allies, especially in Europe due to the continent’s heavy reliance on American gas. With exports averaging 11.6 billion cubic feet per day (Bcf/d) during the first half of 2023, the U.S.  is the world’s largest LNG exporter, ~70% of exports going to Europe and much of the balance going to Asia. 

Currently, the U.S. has seven operating terminals capable of producing as much as 87 million tonnes of LNG a year--enough to satisfy the needs of Germany and France. Five more projects--already approved and under construction--will add another 63 million tonnes of capacity by 2028.

Scores of Big Oil companies including Exxon Mobil Corp. (NYSE:XOM), Chevron Corp. (NYSE:CVX), ConocoPhillips (NYSE:COP) and Energy Transfer LP (NYSE:ET) will potentially be impacted by the LNG freeze after they signed long-term supply deals with Venture Global LNG due to the company’s Calcasieu Pass 2 plant project. The project is part of a proposed 20 mtpa expansion of Venture Global’s existing Louisiana facility. 

But here’s the good news for gas bulls: Whereas proposed LNG projects waiting for permits will probably now have to wait until 2025 due to the November elections, Energy Intelligence has reported that interest in long-term LNG projects remains robust. Earlier, energy Intel had provided estimates that around 69 million tons per year of LNG would reach Final Investment Decision (FID) in the current year, potentially the most significant year for FIDs since 2019, when more than 70 million tons/yr was sanctioned. 

The energy agency says momentum remains strong following more than 40 million tons/yr in foundation supply agreements over the last two years, supporting projects that include Commonwealth, CP2 in North America, Delfin and Saguaro. The new approvals stand to increase capacity under construction by 40% and extend the next supply wave to 2028-29. 

Obviously, the LNG freeze means it’s highly unlikely that Energy Intel’s forecast will be met in the current year. However, we expect the LNG momentum to continue under the next government regardless of who wins the November presidential elections due to Biden’s commitment to U.S. allies and Trump’s pursuit of higher fossil fuel production with the former president vowing to restart approvals on his “very first day back”. 

“The decision will not affect our forecast for U.S. LNG exports out to 2028, but after that it could affect the trajectory and pace of the sector’s growth and have potential to tighten the market in the long run,” Giles Farrer, head of gas and LNG asset research at Wood Mackenzie, has told the Financial Times.

That said, the LNG hiatus could complicate matters if it carries on for too long. LNG buyers would be forced to look elsewhere while buyers would struggle to get financing to reach the critical final investment decisions without buyers if the government drags its feet.

Source: Energy Intel

Source: Y-Charts

Gas Prices Lag

Back in 2022, Europe’s key front-month Dutch Title Transfer Facility (TTF) rocketed to an all-time high of €340 per megawatt-hour while U.S. Henry Hub gas prices hit a 15-year high of $9.24 per MMBtu around the same time European gas peaked as the continent scrambled for new gas supplies after it ditched Russian gas. Unfortunately, booming production coupled with mild weather has badly tanked gas prices, with TFF prices falling to below €30 per megawatt-hour, the lowest level since August 4th, while Henry Hub gas has now sunk to $2.02/MMBtu. 

Wall Street is predicting more pain in natural gas and LNG markets in the current year: in its report dubbed ‘Global Gas and LNG: 5 things to look out for in 2024’, Wood Mackenzie has forecast that mild Northern Hemisphere winter coupled with high storage levels in Europe will keep global gas prices subdued in 2024.

“[Wood Mackenzie] has been forecasting lower 2024 prices for much of last year, especially compared to forward curves, amid weak market fundamental expectations. Global LNG supply growth will remain limited at 14 million, but with Asian LNG demand still weak, competition for LNG is unlikely to heat up,” Massimo Di Odoardo, Vice President of Gas Research at Wood Mackenzie, has said.

By Alex Kimani for Oilprice.com