That sinking feeling
The use of LNG across the shipping industry has increased sharply in the last ten years and the number of LNG-fueled vessels is expected to almost double in the next six years, but the climate, health, and financial risks are colossal if these trends continue, write Elissama De Oliveira Menezes and Melissa Lim in EM Magazine.
Big banks still slow to exit from oil and gas
Last year’s projection from the International Energy Agency that there is no room for new oil and gas fields beyond 2021 for a 50% chance of reaching net zero by 2050 has so far brought about only marginal policy action from the sector’s commercial bank supporters, writes Nick Ferris in Energy Monitor.
Gas plant development plans in the U.S. set to collide with climate goals
Plans for roughly 17,000 megawatts of new gas plant capacity in the next few years pose a serious challenge to U.S. power sector decarbonization goals by 2035, and big utilities are not backing away from their buildout plans, writes Michael Copley in NPR.
Victory again for Tiwi Islanders over Santos: The full bench of the Australian Federal Court has unanimously rejected an appeal by Santos against a September 2022 Federal Court verdict that the oil and gas company had not adequately consulted Tiwi People who stood to be potentially affected by its A$4.7 billion (US$3.2 billion) offshore Barossa gas project. “We have fought to protect our sea country from the beginning to the end and we will never stop fighting,” said Tiwi Senior elder Dennis Murphy Tipakalippa, the plaintiff in the original trial. “Santos and every other gas company must take note that this is our country and we must be consulted.” Santos remained bullish about the project after the court’s dismissal of its appeal, though it is now facing significant delays. Amid concerns following the landmark ruling that Australia’s gas industry was seeking new legislation to reduce the verdict’s wider impact, federal resources minister Madeleine King stated that the government intends to engage with Australia’s offshore oil and gas regulator “to ensure that robust consultation requirements are clearly communicated to industry” for projects that may affect traditional landowners. (Federal Court of Australia judgment, ABC News, The Australian Financial Review)
New oil and gas drilling banned by Los Angeles City Council: In a decision that was quick to draw the threat of legal action from industry, the Los Angeles City Council has voted unanimously to ban drilling of new oil and gas wells and phase out existing wells within 20 years. The ban on drilling in the city of Los Angeles, which according to official data had 780 active and 287 idle wells in 2018, is part of a region-wide effort to shut down oil and gas extraction throughout the county of Los Angeles, the toxic effects of which have disproportionately impacted communities of color for decades. The CEO of Warren Resources, a company still active in the Los Angeles Basin, commented: “We intend to use all available legal resources to protect our major investment from this unlawful taking.” (The Associated Press)
US$22 billion in proposed gas infrastructure may be axed in Brazil: The government transition team of newly elected president Lula de Silva, set to take office on January 1, is considering the cancellation of 8,000 megawatts of new gas plant capacity and supporting pipelines that received the go-ahead last year under outgoing president Jair Bolsonaro. Marina Silva, expected to become the country’s environment minister for the second time in the new year, tweeted the news, citing the R$117 billion (US$22 billion) in savings that would result for the Brazilian state. (Climate Home News)
Germany pushes the LNG envelope even further: Commodity trader Trafigura is to supply “significant volumes” of U.S. LNG over the next four years to the German gas trader Securing Energy for Europe (SEFE), which prior to recent recapitalization by the German government was known as Gazprom Germania. The deal is underpinned by a major US$3 billion loan to Trafigura, partly guaranteed by Berlin via Germany’s export credit agency, and arranged and underwritten by Deutsche Bank with a pool of more than 25 banks participating in the loan. In a separate deal, British energy company INEOS signed a 20-year contract to take delivery, starting in 2027, at the proposed Brunsbuettel terminal of 1.4 million tonnes per annum (mtpa) of LNG from Sempra Infrastructure’s under development Port Arthur terminal in Texas. An investigation by Desmog has confirmed the extent to which gas lobbyists have targeted the German government since the outbreak of war in Ukraine. The investigative outlet found evidence of at least 547 meetings between German government officials and domestic and international gas companies and industry groups between February and September. (Trafigura press release, INEOS press release, Desmog)
Promoters upbeat about Central European Hydrogen Corridor prospects: Plans to transport hydrogen over 1,200 km from Ukraine to Germany via pipeline by 2030 are progressing after a year-long pre-feasibility study, which the promoters of the Central European Hydrogen Corridor (CEHC) said had been “very positive.” While acknowledging “many uncertainties remaining,” including the impacts of the war in Ukraine, the gas infrastructure companies behind the project believe that CEHC could eventually transport up to 1.3 million tonnes of renewable hydrogen, or 13% of the EU’s new renewable hydrogen import target under the REPower EU Plan. EU funding support may be sought. Without providing details, the head of Slovakia’s EUSTREAM, one of the project partners, commented: “The initial analysis confirms that the most relevant natural gas pipelines for this project can be repurposed to carry 100 per cent hydrogen.” (CEENERGY NEWS)
UK–U.S. deal finally lands, and underwhelms: With the UK’s imports of U.S. LNG so far this year running at around 11 billion cubic meters (bcm), according to data from Refinitv Eikon, Rishi Sunak and Joe Biden have announced the largely symbolic “U.K.–U.S. Energy Security and Affordability Partnership” that includes a pledge from the White House for U.S. private sector exporters to deliver at least 9-10 bcm of LNG to British terminals over the next year. Recent calculations from Rystad Energy estimate that LNG deliveries into Europe from the U.S. typically have an upstream imported emissions intensity greater than 70 kg of CO2 per barrel of oil equivalent, seven times worse in climate terms than piped gas imports from Norway and more than double the emissions intensity of Russian piped gas. (Reuters, The Guardian, City A.M.)
France: Engie has entered into a 15-year sale and purchase agreement with Sempra Energy for deliveries of approximately 0.875 mtpa of LNG from the proposed Port Arthur LNG export terminal in Texas.
Hungary: To enable Budapest to reduce its reliance on Russian gas, discussions are advancing with Slovenia on the construction of a cross-border pipeline that would supply Hungary with Algerian gas.
Indonesia: The country’s first offshore oil and gas platform, formerly operated by Chevron at the East Kalimantan-Attaka block off the coast of Balikpapan, has been decommissioned in cooperation with a South Korean consortium.
Japan: The government has announced plans to support the construction of 6,000 megawatts of new LNG-fired gas plants by 2030, thought to be the equivalent of seven or eight new power plants.
Mozambique: The European Peace Facility has provided €20 million (US$21 million) to the Rwandan Defence Force to support its continued deployment against insurgents in Mozambique's Cabo Delgado province where development of TotalEnergies’ LNG export terminal remains frozen.
Netherlands: Following significant boosts to LNG import capacity this year, the Dutch government and state-owned Gasunie say they are looking at ways to make further capacity additions.
Papua New Guinea: TotalEnergies intends to add carbon capture and storage “from day one” for its 5.3 mtpa Papua LNG export terminal that is slated to come online in 2027.
UK: A legal challenge taken to the Court of Appeal in London by Friends of the Earth alleges that the state-backed UK Export Finance’s funding support for the Mozambique LNG project is incompatible with the Paris Agreement.
U.S.: Republican Senator Pat Toomey has filed legislation to accelerate completion of the Mountain Valley Pipeline, while a coalition of environmental and advocacy groups has called for more public comment before federal agencies issue a draft report on the struggling project.
European gas consumption plunges again in November as premium price LNG imports soar: Data from energy consultancy ICIS have shown that the EU’s gas demand in November was 24% below the five-year average, continuing a trend set in October. High prices were thought to be behind significant cuts in industrial consumption particularly. At the same time, ICIS found that the EU and the UK had imported a record monthly high of 11.14 million tonnes of LNG in November, with imports of LNG on course to exceed this level in December. (The Financial Times)
Festival of football promoting fossil fuel horror show: Where not so long ago Gazprom marketing was a familiar sight accompanying major international football tournaments, QatarEnergy’s stadium advertising has been very prominent during this year’s World Cup. New research from BankTrack has exposed the beautiful game’s latest dubious association with fossil fuels, finding that should Qatar exploit all of its vast oil and gas reserves it will lead to 50 billion tons of carbon dioxide emissions when the fuels are burned. These emissions will cause US$20 trillion in damage and 11 million deaths, according to the NGO’s calculations. Assisting QatarEnergy’s expansion plans are international commercial banks such as Citi, Deutsche Bank, and HSBC which helped the company raise US$12 billion in one bond issue alone last year. (BankTrack, The Guardian)
Expansion of huge Leviathan field in the offing: NewMed Energy, the main stakeholder in Israel's Leviathan offshore gas field, has indicated that it does not want Egypt’s LNG plants to be the sole export outlet for gas from the field as the potential to supply European markets looms large. A final investment decision on expanding Leviathan’s production, from the current 12 billion cubic meters per year (bcm/y) to 14 bcm/y, is hoped for next year. NewMed CEO Yossi Abu said that developing a floating LNG export terminal specifically for Leviathan was now the preferred option and had received support from the Israeli government, though it would take several years to construct and commission. Further developing Leviathan to a production level of 21 bcm/y “within this decade” was also a target, said Abu. (Reuters)
Deeper North-South Europe gas integration advances in Athens: Gas companies from Greece, Bulgaria, Romania, and Hungary have signed a Memorandum of Understanding aimed at pushing forward efforts to enable bidirectional flows of gas from north to south and from south to north. The four countries’ plans for the so-called Vertical Corridor date back to 2016, and this fresh impetus for infrastructure and regulatory development is being viewed as supporting Greece’s ambitions of becoming an LNG hub for Europe. (Reuters)
Australian oil and gas major remains “committed to exploring for hydrocarbons”: Woodside Energy, which has recently begun sending Australian-sourced LNG to gas-hungry Germany, has told investors that despite the prospect of a less than smooth transition to non-fossil fuel energy sources, it fully intends to extract more offshore gas. The company is, however, facing regulatory headwinds including on its Scarborough field offshore Western Australia, which has been expected to start production in 2023. Strengthened requirements for public consultation following the Traditional Owners v Santos legal judgments mean that Woodside has more to do to secure official approval for Scarborough. “We are certainly concerned...processes are slowing down to be really frank,” company chief executive Meg O’Neill griped at an annual investor briefing day. (The Sydney Morning Herald, GEM.Wiki)
Ebbs and flows at U.S. fracked gas export terminals: Despite its own analysis finding that the proposed Commonwealth LNG terminal on the southwest Louisiana coast will emit the equivalent of 3.5 million tons of carbon dioxide a year, the U.S. Federal Energy Regulatory Commission (FERC) has been accused of caving to growing political and lobbying pressure by approving the project. Other state and federal permits are still needed before its developers can move to a final investment decision (FID). The high level of annual greenhouse gas emissions identified by FERC only includes those anticipated at the Commonwealth complex, not the cumulative emissions from gas drilling, transportation to the facility or the eventual burning of the fuel by customers. Another pre-FID, U.S. terminal project, NextDecade’s Rio Grande LNG facility in Texas, has begun initial site preparation works with construction firm Bechtel. The Freeport LNG terminal in Texas, closed since an explosion in June, is now predicted to restart “around year end” according to a company spokesperson, though doubts persist over when full regulatory approval for the restart might be granted. (Inside Climate News, LNG Prime, Reuters)
“To [reduce prices] we have to make investments for the long term – 10, 15, 20 years – and we have to recover those investments, but if gas is not in the energy mix for the future who is going to invest in it?”
said Claudio Descalzi, CEO of Eni, while also claiming gas demand in Europe has not fallen significantly in response to historically high prices.
No room for new gas in South Korea, Climate Analytics, November 2022. (Pdf)
This 30-page report discusses how the South Korean government’s newly proposed electricity plan, which envisages a significant boost in gas capacity, clashes with decarbonization pathways by 2035 and would increase air pollution and exacerbate import dependency.
EU Commission proposal for joint gas purchasing, price caps and collective allocation of gas: an assessment, The Oxford Institute for Energy Studies, December 2022. (Pdf)
This 33-page report assesses the protracted debate over the European Commission’s proposal for an EU-wide gas price cap and concludes that time and effort would be better spent on measures which reduce gas demand or supporting those consumers who suffer most from high gas prices.
Paris Maligned: Why investors should assess the climate alignment of oil & gas companies, Carbon Tracker, December 8. (Pdf).
This 43-page report analyzes the production and spending plans of upstream oil and gas companies over the next decade and finds that from January 2021 to March 2022 they approved US$166 billion of investment in new oil and gas fields, almost all of which are incompatible with limiting warming to 1.5°C. US$58 billion of this investment was committed to projects that are only likely to be economic if demand for oil and gas pushes global temperatures beyond 2.5°C.