Natural Gas Daily: November 17th, 2020
Sempra Energy announced it had taken a final investment decision (FID) on the first phase of its Energia Costa Azul (ECA) LNG project on Mexico's Pacific coast. It is the first approval of new liquefaction capacity in the world this year.
- The first phase will comprise a 3.25mn metric ton/year liquefaction train, with Japan's Mitsui and France's Total having committed to taking around 2.5mn mt/yr of its output under a 20-year contract.
- In contrast to record project approvals in 2019, LNG developers have delayed signing off on new liquefaction capacity this year in light of the gas price collapse largely caused by the coronavirus pandemic.
TC Energy, the Canadian-based energy infrastructure development giant, expects to see a 40% increase in North America’s natural gas supply by 2040, officials said at the company’s virtual investor day webcast.
Over the same timeframe, North American gas demand is projected to increase to more than 140bn ft3/day from about 100bn ft3/day, driven largely by power generation, as utilities move away from coal, and LNG exports.
Qatari LNG supplier Qatargas announced it had used a Q-Max LNG carrier (LNGC) for the first time to ship LNG cargo to the Tianjin LNG terminal China.
- The Q-Max is the largest LNGC class in the world, with a 266,000-m3 capacity.
- The 6mn metric ton/year Tianjin LNG terminal is owned and operated by China's Sinopec, and is undergoing an expansion to raise its capacity to 10.8mn mt/yr. It was brought online on February 2018 and has since handled over 200 LNG cargoes.
The long-term outlook for natural gas will greatly vary depending on policies regarding climate, as well as factors like affordability, fuel substitution, geopolitical tensions and the extent of market integration, Norway's Equinor said in an outlook report.
- Equinor's most bearish outlook for demand is under its Rebalance scenario, which sees CO2 emissions never returning to the pre-pandemic level and a 15% reduction in absolute global energy demand by 2050.
- Under its Reform scenario, where climate policies are tightened but not by enough to meet Paris Agreement goals, gas consumption will grow by 0.5% on average annually between 2025 and 2050, with Asia accounting for 63% of this rise.
The trend of consolidation among independent oil and gas producers will pick up pace as a result of the energy transition, Wood Mackenzie said in a research note, as "a world on a 2-degree glidepath does not need thousands of independents chasing volume."
- Consolidation will be the "defining theme" over the coming decades, WoodMac said. Some oil and gas companies will scale back their upstream operations and emerge as big energy players, while others will establish themselves as big oil players, through vertical mergers with value chain integration.
- Some existing oil majors will grow bigger, as demonstrated by Chevron's recent acquisition of Houston-based Noble, WoodMac said.
Germany's RWE Generation has received a contract to build and operate a 300-MW gas-fired power plant in southern Hesse that will serve as a reserve source of power, the company said on November 13.
- Germany has committed to phasing out all nuclear power by the end of 2022. Establishing more gas-fired reserve power is seen as a means of ensuring supply security as this baseload capacity is removed and Germany increases its renewable energy generation.
Natural gas is becoming more important in German industry, especially for power generation. Citing figures from the federal statistical office, gas lobby group Zukunft Erdgas said gas "now accounts for 50% of the electricity generated by industry."