Off Message in Shanghai [LNG Condensed]
The message from Shanghai’s LNG 2019 was simple and clear; LNG is green and sustainable. This slogan was endlessly repeated in a multitude of homilies, delivered from the conference pulpit by the industry’s high priests, the CEOs of the world’s major oil and gas companies. It adorned the front, sides and back of almost every single chapel in the exhibition hall.
But did the message really emanate beyond the conference walls?
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Not simply the result of onerous Chinese restrictions on reporting and the Great Firewall of China, LNG 2019 was an echo chamber par excellence. It was not the exercise in engagement with policy makers, non-govern- mental organisations and the wider public that the industry so desperately needs, but uncritical, internal ideological reinforcement.
The resulting impression was not one of optimistic self-belief, but doubt, of an industry trying against the odds to convince itself of its holiness.
But repeating something ad infinitum does not make it true and this is where the industry’s message really falls flat on its face. LNG is not green and it is not currently sustainable.
It is greener than coal or oil, but that is not the same as being ‘green’. It may be sustainable, but only in conjunction with other economically uncertain technologies, for example, hydrogen and carbon capture and storage (CCS), which will make natural gas use more expensive.
LNG is unquestionably part of the climate change solution, but for the moment only as a transition fuel. The hope that it becomes a destination will remain a tough argument to make, if the industry persists in pretending that LNG is something which it is not.
The bottom line is that LNG’s positive attributes are relative not absolute. They depend critically on the point of application – LNG can be expensive and dirty just as much as it can be green and clean. Gas is the best of the fossil fuels, but equally the least worst.
Over-selling a product does not engender trust.
That said, there are solid reasons for industry optimism. The depth of demand for LNG is vast because it runs in parallel with the desire to switch from coal to gas, which is strong for both local and global environmental reasons in Europe, China and increasingly other parts of Asia.
In the US, the equation is even simpler, gas is pushing out an aging and polluting coal fleet in the power sector because it is so abundantly cheap, and this affordability is now being transmitted worldwide via growing US LNG ex- ports. A period of sustained low prices will hurt and expose weaker companies and projects, but equally it will encourage and embolden demand.
But let us reinforce reality one more time. Liquefaction is an energy-intensive process. LNG is an export not local produce. Methane is a potent greenhouse gas itself, and there are slips at every point in the supply chain right down to its use in fertilizer manufacture, power plants and engines.
There is absolutely no reason to think that LNG will somehow escape exposure to full life-cycle greenhouse gas emissions analysis. It will not and the fact is, as it stands, LNG only measures up well in this regard if set against its dirtier fossil fuel cousins.
This is why plans to use electric turbines to power the liquefaction process at projects like LNG Canada, or Chevron’s CCS ambitions at Gorgon LNG in Australia are critical. But they are only a modest start in what must be achieved.
For the industry’s associations and trade groups the objective must be to encourage technological diffusion, which will require collaboration and cooperation. This will not be easy as they will be opposed by companies keen to use emissions reduction technologies as a competitive edge, particularly when it comes to permitting.
Sitting around repeating the mantra that LNG is green and sustainable simply won’t cut the mustard. Get out there and convince the world that LNG can be made green and sustainable, preferably by deed as much as by word. Then, and only then, will the industry become a destination rather than a dispensable tool of transition.
Volume 1, Issue 4 - April 2019 Now Available - Download Free by signing up below:
In this Issue:
> Sanctions loom over Russian LNG
> Editorial: Off Message in Shanghai
> Feature: Natural gas and the hydrogen economy
> Feature: South Korean LNG set for growth
> Country focus: Colombia: an uncertain market for LNG
> Project spotlight: Delfin LNG: an innovative approach to FLNG and more!
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