From the editor: A cleaner gas molecule [Gas In Transition]
As the world makes its uncertain way to a lower-carbon future – and with the European energy crisis and Russia’s military aggressions serving as a back-drop – a certainty that the gas industry has recognised for many years is finally beginning to dawn amongst policy-makers: no single technology or fuel can get us anywhere close to net zero by 2050.
As recently as COP26 last November in Scotland, that wasn’t the case: EU leaders and ENGOs were convinced increased reliance on renewables like wind and solar were our salvation. But as this past winter has demonstrated all too painfully, that is far from the truth.
But as Rafi Tahmazian, director and senior portfolio manager at Canadian investment bank Canoe Financial, pointed out at a Vancouver natural gas conference in April, at least one positive has come from the European crisis – the alternative energy that everyone has been looking for turned out not to be wind or solar, but natural gas.
And Canada – which has yet to have functional direct access to export markets for its massively abundant gas reserves – is rising to the top as the premier source of perhaps the greenest natural gas in the world.
The Canadian gas industry, of course, has long known this. Just sit down with Timothy Egan, CEO of the Canadian Gas Association, which will host next year’s LNG2023 conference (yanked from Russia after its invasion of Ukraine) for more than five minutes and that becomes crystal clear.
And the International Energy Agency (IEA) also got the memo, a few years ago, in fact. In its 2019 World Energy Outlook, the Paris-based energy watchdog noted that LNG produced using low-carbon electricity eliminated virtually all the emissions associated with liquefaction and contributed to a 40% reduction in greenhouse gas emissions when it replaces coal in thermal energy production. Even greater reductions are achieved when it replaces coal in power generation.
BC, it said, is leading the world in developing low-carbon LNG, while global consultancy Wood Mackenzie has said that if all the proposed Canadian LNG facilities come to fruition, they could reduce Canada’s CO2 emissions by about 115mn mt, or 60% of the nation’s 2030 target.
The entire natural gas value chain in Canada, from production in the world-class Montney shale/tight gas play, through the midstream and downstream gaseous fuels sector, to end-use (including liquefaction) is amongst the most innovative in the world. And that innovation is largely responsible for delivering natural gas that is the least carbon-intense of any competing supply, anywhere.
First things first
That innovation starts, as it usually does, at the beginning, in the vast Montney fairway straddling the BC/Alberta border. Montney gas comes out of the ground with about the lowest carbon content of any natural gas in the world.
But global major Shell, through its Shell Canada subsidiary, has been working to lower that carbon footprint even more, electrifying virtually all of its gas processing infrastructure in the area, replacing gas actuated pneumatics with electric valves, and basically just tightening up the whole production and pre-treatment processes, reducing or eliminating leaks and flaring.
Shell, with a 40% interest in the LNG Canada consortium, will provide a similar share of the liquefaction facility’s feed gas; other consortium partners, including Malaysian Petronas through its Petronas Canada subsidiary, has been doing similar work, as have many other Montney producers.
At the other end of the pipe, LNG Canada is adopting some of the most energy-efficient processes available to the liquefaction industry, and is using clean, renewable electricity to power at least some of those. When it begins operating in 2025, the Kitimat facility will produce LNG with a carbon intensity of about 0.15 mt CO2e/mt of LNG, less than half the global average of 0.35 mt CO2e/mt of LNG.
Other projects under development on the west coast will be even cleaner, essentially because they will be fully-electric: the 2.1mn mt/yr Woodfibre LNG project at Squamish, set to begin construction this year, will check in at 0.03% mt CO2e/mt, while Cedar LNG, which the Haisla First Nation is developing in partnership with Pembina Pipeline a stone’s throw from LNG Canada, will have an emissions intensity of 0.08 mt CO2e/mt of LNG.
But the low-carbon advantage doesn’t fall only to LNG Canada, Woodfibre or Cedar, or to the producers that will eventually fill those liquefaction facilities. The Canadian gas industry as a whole is amongst the cleanest in the world, again largely the result of the innovation that the CGA’s Egan says is driving it.
Canadian gas producers are world leaders in reducing methane emissions along the entire natural gas value chain, and between 2000 and 2018, they cut emissions by 16%, and are well on the way to achieving a government-mandated 45% reduction by 2030, and a 75% reduction by 2050.
For comparison purposes, between 2000 and 2018, China’s methane emissions rose by 133%, while Russia’s jumped by 47%.
To remind: the Canadian gas industry has long known all of this, and over the past several years, it has spread the message as best it can, all the while battling a federal government hell bent on strangling its own oil and gas industry.
Now, the rest of the world is taking note, and that global recognition is one factor behind the International Gas Union’s decision to move LNG2023, the world’s largest LNG conference, to Vancouver from St Petersburg, Russia.
“Clean, affordable, reliable gas energy has been foundational to Canada’s well-being, and we have the resources to deliver the same benefits to the world,” the CGA says. “Canadian natural gas – amongst the lowest emitting in the world, produced by an industry with some of the highest performance standards in the world – could be delivering an opportunity for Europe and other markets to lower emissions, maintain affordability and ensure reliability.”