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Gas necessary for Asia, unwise not to invest: Summit

  • Spanish Market: Natural gas
  • 19/06/24

Asia's LNG market faces many uncertainties, but not continuing to invest in it would be unwise as it is necessary for economic growth, said speakers at the Association of Energy Negotiators' International Energy Summit in Bangkok, Thailand last week.

Many countries are increasingly focusing on batteries and renewables as part of their energy transition plans to move away from fossil fuels, but batteries are still far from being commercially attractive from a cost perspective, said Andrew Kirk, vice-president of origination, LNG at conglomerate B Grimm. Batteries may be able to provide a stable solution to the intermittency challenges posed by renewables in some regions, but wealthier countries are failing to acknowledge that developing countries cannot accept the higher costs involved, as well as the massively daunting task of building and installing the required capacity, he said.

"We have to separate the aspirational from the unachievable," said Kirk. There is already instability resulting from gas shortages even in more developed economies such as Australia, where the Australian Energy Market Operator has projected a shortage in southern states. The federal government has confirmed the need for a pro-upstream approach in its future gas strategy, and intends to bring on line new gas supplies and make them affordable during the transition.

"The timeline we have given ourselves is starting to look disorderly," said Kirk, with reference to net zero targets. Advancements and breakthroughs in battery technology will be made, but the timeframe for this cannot be defined. If policymakers do not consider reversing declining gas production, the next 10-15 years will create more geopolitical uncertainty, he said.

Billions of dollars have been spent on current energy systems, said Steve Morrell, senior vice-president of ExxonMobil PNG LNG, adding that it would make more sense to put more gas into the system considering the higher cost of moving to renewables, he added. "Just by replacing coal [with gas], we'll see a 60pc decrease in emissions without any need for breakthrough technologies." said Morrell.

If too much emphasis is placed on renewable energy, this will also lead to declining investment in finding new oil and gas resources, said the executive director of the Petroleum Institute of Thailand, Kurujit Nakornthap, which could lead to energy shortages and more volatile energy prices. "The stone age [ended] not because we ran out of stone, so the oil age is not going to [end] because we're running out of oil," said Nakornthap, paraphrasing a famous quote by ex-Saudi oil minister Sheikh Zaki Yamani.

Challenges faced by buyers, sellers

Gas projects are already at risk of not receiving funding because the current LNG market outlook is unclear, with short-term price volatility, rolling blackouts, power reduction, and uncertainty in supply affecting buyers and sellers, said Morrell.

The whole system is very tight at the moment, added Morrell, and alleviating this is dependent on customers, suppliers and governments as LNG is fundamental to global prosperity. But as a buyer, it is difficult to commit to multi-billion dollar long-term sales and purchase agreements (SPAs) when it is uncertain what the regulatory framework is going to be for the next 5-15 years.

The tightness in supply indicates a need for more LNG, which in turn implies there is a need for more projects requiring multi-million dollar investments and that are looking for 20-year offtakes.

Gas projects need 4-5 years of construction time and can produce for about 20 years. With an uncertain demand outlook and no buyers to take the product, investment decisions cannot be made and projects cannot get off the ground, said Morrell.

"Customers are searching for price signals and trying to plan ahead," said Morrell. But he questioned "if they can't plan six months ahead, how are they going to know 15-20 years ahead?"

The changing LNG model

Buyers also cannot commit to long-term projects if they cannot predict what the energy transition entails, if certain fuels or greenhouse gas (GHG) intensity reductions get mandated, and how that will change the LNG business model.

"The [LNG] market is always changing," said Morrell, with the introduction of carbon pricing to encourage GHG reductions creating further uncertainty for buyers and sellers.

There are three areas within the current LNG model that will evolve, said Kirk. There are going to be many new buyers in emerging markets as they turn to LNG as a transition fuel. Secondly, the affordability of low-emission LNG may be an issue because some markets are unable to afford the extra costs when they are struggling to even move from a coal to gas-based market. Thirdly, SPAs will evolve and contracts must change to become more flexible. So buyers and sellers need to "act in good faith", said Kirk.

But governments and regulators can slow down developments, which can be frustrating for suppliers, said Morrell. There needs to be a realisation that the consumer is paying for incentives and subsidies that the government provides, he said, adding that discussions should move away from 3–5-year political cycles and look at 20 years in the future.


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19/07/24

Williams to resume Louisiana gas line construction

Williams to resume Louisiana gas line construction

New York, 19 July (Argus) — US natural gas pipeline company Williams on Friday told federal energy regulators it will proceed with construction of its delayed 1.8 Bcf/d (51mn m³/d) Louisiana Energy Gateway (LEG) gas gathering line in Louisiana. Williams' letter of intent to the US Federal Energy Regulatory Commission (FERC) is the culmination of a series of lawsuits across multiple Louisiana parishes brought by US midstream rival Energy Transfer, which seeks to stop Williams and two other pipeline companies from crossing its own gas line in the Haynesville shale. While Williams is still waiting on a final ruling over two crossings in Vernon Parish, its recent legal victories over Energy Transfer and acquisition of necessary federal permits and easements from landowners have made it possible to commence construction of LEG, Williams said. The final ruling out of Vernon Parish will be decided "soon," Williams said. Williams said it intends to release its contractor to resume pre-construction activities along its right-of-way as early as 25 July, then proceed with construction. "But for the crossing litigation with Energy Transfer, construction of [LEG] would be well underway," Williams said. The litigation has pushed Williams' expected in-service date for LEG from late 2024 to the second half of 2025. Williams prevailed over Energy Transfer earlier this month in DeSoto Parish and in early June in Beauregard Parish . By Julian Hast Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Von der Leyen faces new Green Deal challenges


19/07/24
19/07/24

Von der Leyen faces new Green Deal challenges

The president promises a ‘clean industrial deal', but will need to make compromises over climate policy, writes Dafydd ab Iago Brussels, 19 July (Argus) — Ursula von der Leyen's re-election by the European Parliament as president of the European Commission on 18 July promises to see a doubling down on climate and energy policy, with her 2024-29 mandate stipulating greenhouse gas (GHG) emissions cuts of at least 90pc by 2040 compared with 1990. "I have not forgotten how [Russian president Vladimir] Putin blackmailed us by cutting us off from Russian fossil fuels. We invested massively in homegrown cheap renewables and this enabled us to break free from dirty Russian fossil fuels," von der Leyen says, promising to end the "era of dependency on Russian fossil fuels". She has not given an end date for this, nor specified if this includes a commitment to ending Russian LNG imports. Von der Leyen went on to detail political guidelines for 2024-29. She has pledged to propose a "clean industrial deal" in the first 100 days of her new mandate, albeit without giving concrete figures about how much investment this would channel to infrastructure and industry, particularly for energy-intensive sectors. The clean industrial deal will help bring down energy bills, she says. Von der Leyen told parliament that the commission would propose legislation, under the European Climate Law, establishing a 90pc emissions-reduction target for 2040. Her political guidelines also call for scaling up and prioritising investment in clean technologies, including grid infrastructure, storage capacity, transport for captured CO2, energy efficiency, power digitalisation and a hydrogen network. She plans to extend aggregate demand mechanisms beyond gas to include hydrogen and critical raw materials, and notes the dangers of dependencies and fraying supply chains — from Putin's energy blackmail to China's monopoly on battery and chip raw materials. Majority report Passing the necessary legislation to implement her stated policies will now require approval from EU states and parliament. Unless amplified by Germany's election next year, election victories by far-right parties in France and elsewhere appear not to threaten EU state majorities for specific legislation. Parliament's political centre-left S&D and liberal Renew groups, as well as von der Leyen's own centre-right European People's Party (EPP), have elaborated key policy requests. These broadly call for the continuation of the European Green Deal — a set of legislation and policy measures aimed at 55pc GHG emissions reductions by 2030 compared with 1990. A symbolic issue for von der Leyen to decide on — or compromise on — is that of internal combustion engine (ICE) vehicles. EPP wants to stick to technological neutrality and revise the current mandate for sales of new ICE cars to be phased out by 2035, if they cannot run exclusively on carbon-neutral fuels. The EPP wants an e-fuel, biofuel and low-carbon fuel strategy. Von der Leyen's guidelines reflect the need to gain support from centre-right, centre-left and greens. She says the 2035 climate neutrality target for new cars creates investor and manufacturer "predictability" but requires a "technology-neutral approach, in which e-fuels have a role to play". She has not mentioned carbon-neutral biofuels. It will be impossible for von der Leyen to satisfy all demands in her second mandate. This includes policy requests put forward by the EPP, ranging from a "pragmatic" definition of low-carbon hydrogen and market rules for carbon capture and storage, to postponing the EU's deforestation regulation. EU member states are expected to propose their candidates for commissioners in August, including for energy, climate and trade policy, with von der Leyen's new commission subject to a final vote in parliament in late October. Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Trump vows to target 'green' spending, EV rules


19/07/24
19/07/24

Trump vows to target 'green' spending, EV rules

Washington, 19 July (Argus) — Former president Donald Trump promised to redirect US green energy spending to other projects, throw out electric vehicle (EV) rules and increase drilling, in a speech Thursday night formally accepting the Republican presidential nomination. Trump's acceptance speech, delivered at the Republican National Convention, offered the clearest hints yet at his potential plans for dismantling the Inflation Reduction Act and the 2021 bipartisan infrastructure law. Without explicitly naming the two laws, Trump said he would claw back unspent funds for the "Green New Scam," a shorthand he has used in the past to criticize spending on wind, solar, EVs, energy infrastructure and climate resilience. "All of the trillions of dollars that are sitting there not yet spent, we will redirect that money for important projects like roads, bridges, dams, and we will not allow it to be spent on the meaningless Green New Scam ideas," Trump said during the final night of the convention in Milwaukee, Wisconsin. Trump and his campaign have yet to clearly detail their plans for the two laws, which collectively provide hundreds of billions of dollars worth of federal tax credits and direct spending for renewable energy, EVs, clean hydrogen, carbon capture, sustainable aviation fuel, biofuels, nuclear and advanced manufacturing. Repealing those programs outright could be politically difficult because a majority of spending from the two laws have flowed to districts represented by Republican lawmakers. The speech was Trump's first public remarks since he was grazed by a bullet in an assassination attempt on 13 July. Trump used the shooting to call for the country to unite, but he repeatedly slipped back into the divisive rhetoric of his campaign and his grievances against President Joe Biden, who he claimed was the worst president in US history. Trump vowed to "end the electric vehicle mandate" on the first day of his administration, in an apparent reference to tailpipe rules that are expected to result in about 54pc of new cars and trucks sales being battery-only EVs by model year 2032. Trump also said that unless automakers put their manufacturing facilities in the US, he would put tariffs of 100-200pc on imported vehicles. To tackle inflation, Trump said he would bring down interest rates, which are controlled by the US Federal Reserve, an agency that historically acts independently from the White House. Trump also said he would bring down prices for energy through a policy of "drill, baby, drill" and cutting regulations. Trump also vowed to pursue tax cuts, tariffs and the "largest deportation in history," all of which independent economists say would add to inflation. The Republican convention unfolded as Biden, who is isolating after testing positive for Covid-19, faces a growing chorus of top Democratic lawmakers pressuring him to drop out of the presidential race. Democrats plan to select their presidential nominee during an early virtual roll-call vote or at the Democratic National Convention on 19-22 August. By Chris Knigh t Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Japan’s Shizuoka Gas expands Indian gas presence


19/07/24
19/07/24

Japan’s Shizuoka Gas expands Indian gas presence

Tokyo, 19 July (Argus) — Japanese gas distributor Shizuoka Gas has ventured into India's biogas sector, buying a stake in Indian manure-based producer Farm Gas. Shizuoka Gas has bought 10pc of Farm Gas, a joint venture between Indian gas distributor IRM Energy and Indian consultant Eximius Resources, for an undisclosed sum. Shizuoka Gas previously bought a stake in Gujarat-based IRM Energy in 2021 , which supplies natural gas to the industrial sector. Farm Gas has been operating a biogas plant using cow dung and rice straw since December 2022. The manure-derived biogas is sold to auto firms as a vehicle fuel. The organic fertilizer produced as a by-product during the production process is sold to fertilizer companies and nearby farmers. Cow dung and rice straw creates air pollution, which is a huge problem in India, Shizuoka Gas said. It said it will build its experience in biogas production from the Farm Gas acquisition, with an aim to develop biogas plants in India and southeast Asia in the future. But shipping the biogas to Japan is not a current option, as Japan has already established pipeline gas supplies, it added. By Reina Maeda Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Australian Enterprise gas drives Beach’s Apr-Jun output


19/07/24
19/07/24

Australian Enterprise gas drives Beach’s Apr-Jun output

Sydney, 19 July (Argus) — Australian independent Beach Energy produced more gas and liquids during April-June than the previous quarter but ended its 2023-24 fiscal year to 30 June with output down against a year earlier. April-June sales gas production of 20.2PJ (539mn m³) was 10pc higher than the previous quarter's 18.3PJ and up on April-June 2023's 19.6PJ as it commissioned its Enterprise field in Victoria state's Otway basin. Beach's total 2023-24 production of 18.5mn bl of oil equivalent (boe) was 5pc down on the 19.5mn boe achieved in 2022-23, with natural field decline and rainfall resulting in Beach's oil output falling by 11pc from the previous quarter to 7,400 b/d from 8,300 b/d in January-March. The firm shipped a second 79,000t Waitsia cargo from the Woodside-operated 16.9mn t/yr North West Shelf LNG terminal during the quarter, consisting of Xyris gas plant production and third-party surplus gas sourced through swaps. It expects to achieve the first gas at its delayed 250 TJ/d (6.7mn m³/d) Waitsia gas plant in Western Australia's onshore Perth basin in early 2025 ahead of a 3-4 month ramp-up period. The firm has released a wider than usual production guidance for 2024-25 of 17.5mn-21.5mn boe, to account for uncertainty on the timing of Waitsia commissioning and output growth. Beach identified A$135mn ($90.5mn) in field operating cost savings and sustaining capital expenditure reductions as part of its strategic review findings released on 18 June. Beach confirmed it expects to recognise an A$365mn-400mn pre-tax impairment charge in its full-year results following reassessment of its Bass basin assets in Australia and Taranaki basin project in New Zealand. It is targeting new gas supplies of 150 TJ/d over the coming 12-18 months from the Enterprise, Thylacine West and Waitsia fields. By Tom Major Beach Energy results (mn boe) Apr-Jun '24 Jan-Mar '24 Apr-Jun '23 2022-23 2023-24 Production 4.8 4.5 5.0 19.5 18.2 Sales 5.4 4.8 5.7 20.7 21.3 Sales revenue (A$) 433 392 450 1,617 1,766 Realised gas price (A$/GJ) 10.30 9.70 9.50 8.80 9.50 Source: Beach Energy Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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