Structural power and the future of LNG in Russia’s political economy
While much attention has been given to Russian LNG exports slipping through into Europe in increased volumes since the invasion of Ukraine, structural changes and rivalries have been intensifying in Russia’s gas sector, writes Zach Simon at the Energist Substack.
Thailand’s coal to gas switching drives record high power sector emissions
Ramped up LNG imports this year have helped Thailand cut its reliance on coal power but have also resulted in a major jump in gas-fired emissions as the country’s uptake of renewables lags, writes Gavin Maguire in Reuters.
Better to burn out than fade away?
A variety of factors suggest that the stunning 27-year LNG supply deals with QatarEnergy entered into by European companies in recent weeks may well turn out to be overly bullish plays down the line, writes Seb Kennedy at Energy Flux.
Biden administration officials court the LNG lobby
As executives gather at the North American Gas Forum in Washington, D.C., why are officials from the U.S. Department of Energy and Federal Energy Regulatory Commission — in charge of determining whether new LNG gas export projects are “in the public interest” — meeting behind closed doors with the same industry they’re supposed to be regulating, asks Gas Leaks.
Australia’s environment minister urged to stop Barossa pipeline construction: Tiwi Traditional Owners have submitted a last minute appeal to Australia’s environment minister, Tanya Plibersek, calling for her to intervene to protect their underwater cultural heritage from a pipeline linking the offshore Barossa gas project to an onshore LNG terminal in Darwin. The energy company Santos notified Australia’s offshore regulator earlier this month that it was ready to start laying the pipeline following the completion of a heritage survey it was ordered to carry out to assess the project’s impact on ancient burial grounds and songlines. Santos chief executive Kevin Gallagher has said that an independent expert concluded “there were no specific underwater cultural heritage places along the planned Barossa pipeline route.” This conclusion continues to be disputed by Tiwi people. A public petition states that “Santos’ own report found evidence of 163 sites of potential archaeological and paleoenvironmental significance in the pipeline route, but have [sic] refused to investigate further.” The appeal has been lodged under the Aboriginal and Torres Strait Islander Heritage Protection Act 1984, legislation which allows the minister to halt activities when an Aboriginal site of significance is under serious and immediate threat of injury or desecration. (WAtoday, Environment Centre NT)
Public subsidies for gas tripled in 2022 across the EU: A new annual report from the European Commission detailing energy subsidies in the EU’s 27 member states and the progress being made towards phasing out fossil fuel subsidies shows that governmental measures aimed at gas reached €46 billion (US$48.7 billion) in 2022, a more than threefold increase on the 2021 total. This rise, the steepest among subsidies for fossil fuels, reflects the impact of last year’s energy crisis and the emergency measures taken to counteract the effects of high gas prices on the cost of living for vulnerable consumers and on the production costs of European industries. According to the report, the crisis response was evidenced by total EU energy subsidies reaching an estimated €390 billion in 2022, up from €177 billion in 2015 and €216 billion in 2021. Increased subsidies aimed at oil and gas drove a jump in fossil fuel subsidies to €123 billion overall last year, up from €56 billion in 2021. Support for energy efficiency measures increased by 40% to €32 billion. Introducing a new calculus on the negative impacts of fossil fuel subsidies, measured on whether “the price or cost reduction that they cause incentivises maintaining or increasing the availability and/or use of fossil fuels,” the report concludes that 98% of fossil fuel subsidies in 2022 — or €120 billion — “are considered environmentally harmful.” (European Commission [Pdf])
Gas flaring permits on the rise in Texas: In spite of a state rule prohibiting the flaring — or burning off — of gas at drilling sites except under a few specific conditions, and amid growing concerns over the practice’s contribution to local air pollution and climate change, the state agency responsible for regulating the oil and gas industry in Texas is issuing companies with an increasing number of flaring permits. Waivers from the Railroad Commission of Texas (RRC) are being awarded even when individual commissioners express concern about applications, prompting RRC critics to accuse it of rubber-stamping. Since May 2021, state records show that only 44 flaring exemption applications were denied by the RRC. At the same time, more than 8,000 applications have been approved at an increasing annual rate since 2021. Increased flaring authorizations are due in part to increased production, which has risen since a sharp decline at the start of the COVID-19 pandemic in 2020. However, advocates calling for reform of the RRC insist its decision-making is giving companies far too much leeway. (Inside Climate News)
Anchor from Chinese vessel the likely cause of Baltic Sea pipeline rupture — Finnish authorities: Investigators looking into what caused the Balticconnector gas pipeline to start leaking on October 8 presented a six-ton anchor, found lying on the seabed near the pipeline, at a news conference and said that further inquiries had ascertained that the Chinese “NewNew Polar Bear” container vessel is missing an anchor. The ship, which was flying the flag of Hong Kong, sailed over the pipeline on October 8 en route to St. Petersburg. The Finnish police said that national officials are “closely” cooperating with Chinese authorities as efforts continue to establish if the damage was intentional. Prior to the latest presentation of evidence, and with the NewNew Polar Bear already under suspicion, a Chinese foreign ministry spokesperson called for an “objective, fair and professional” investigation into the damage. A previously suspected Russian vessel was no longer part of the main investigation, the Finnish police said. (Bloomberg, BBC, Reuters)
Bangladeshi artists deliver “LNG is not green, LNG is not clean” message direct to General Electric and its investors: GE Vernova, a recently rebranded subsidiary of General Electric (GE), is lining up to supply turbines for several LNG power projects in Bangladesh. Working with Australian environmental NGO Market Forces, Bangladeshi artists pitched up last month at the New York offices of the company’s investors with hard-hitting artworks spelling out the climate dangers of fossil fuel projects and their impacts on people in low-lying Bangladesh. An art exhibition was also set up close to General Electric’s headquarters in Bangladesh. Multimedia artist Debashish Chakrabarty said that the aim was “to tell these corporations that we people and civil society know what you are doing, and you should do better.” GE’s expertise in wind energy could be boosting Bangladesh’s huge renewable energy potential, says Market Forces, which calculates that over their lifetime GE’s planned LNG plants in Bangladesh would add almost double the country’s total annual greenhouse gas emissions. (Reuters)
UK gas proponents dig in their heels for domestic hydrogen heating: Unambiguous recommendations from the UK’s infrastructure watchdog that potential governmental support for hydrogen heating in homes should be ruled out in favor of the deployment of electric heat pumps have drawn immediate resistance from some sections of the UK government and a heating industry body. A five-year report from the independent National Infrastructure Commission (NIC) aligned with a wide range of previously published scientific studies that have found that hydrogen heating is not suitable for UK homes, with high costs and inefficiency prominent among the report’s concerns. The UK government has delayed making a decision on whether to support hydrogen heating until 2026. In the wake of the NIC report, however, a government department told The Guardian that the gas network — required for hydrogen delivery — “will always be part of our energy system,” and that it would continue to work with the heating industry to explore the potential for hydrogen in home heating. The Energy and Utilities Alliance, whose members include boiler manufacturers and gas companies, also vowed to continue to press the case for hydrogen in homes. “The shift away from gas boilers means the end of the gas grid as we know it,” commented Juliet Phillips at the E3G thinktank, “and those who operate the infrastructure aren’t going down without a fight. Upgrading to clean, electric heat presents an existential threat to their business model and profits.” (The Guardian, Hydrogen Insight)
“[Th]ere is a considerable risk of losing around $4 billion in capital investments for important upstream projects during the next three years due to the potential shift in the regional landscape. This turn could undermine the progress made towards normalizing a region that has seen significant exploratory success and the discovery of low-cost resources,”
noted Rystad Energy of one aspect of potential disruption to the East Mediterranean gas market as a result of the ongoing conflict between Israel and Hamas.
Australia: Efforts by the Australian Taxation Office to clamp down on tax avoidance among oil and gas companies led to the sector contributing A$4.4 billion (US$2.8 billion) out of record additional tax revenues of A$6.4 billion clawed back from large corporates in the 2022–23 financial year.
Ghana: An energy ministry official has said the West African country is aiming to both avoid stranded assets and generate revenue to fund its energy transition by selling more exploration rights at its oil and gas blocks, including both new acreages and fields relinquished by ExxonMobil.
Indonesia: To replace coal-fired units at its Grasberg copper mine in Papua, PT Freeport Indonesia has announced plans to invest approximately US$1 billion for the construction of a 265 megawatt combined cycle gas turbine power plant that will be supplied with LNG.
Libya: State-owned National Oil Corporation (NOC) has signed a memorandum of understanding with Norway’s Equinor to assess oil and gas potential in the Libyan maritime region.
Malta: NGOs are stepping up pressure on the European Commission to exclude the €400 million (US$423 million) Melita TransGas pipeline from potential EU funding support on climate grounds and because of the project’s alleged links to corruption and the murder of the Maltese journalist Daphne Caruana Galizia.
Montenegro: Twenty-seven NGOs have written to the European Commission President Ursula von der Leyen calling on the EU not to support a proposed LNG import terminal at the Adriatic port of Bar.
Mozambique: TotalEnergies expects to take a final investment decision (FID) by September 2024 on the Matola floating LNG import terminal, gas from which is expected to supply South African markets.
North Macedonia: The promoters of the North Macedonia–Greece interconnector have taken FID and expect to start the project construction work in early 2024.
Qatar: Italy's Eni became the third European company this month to sign a 27-year LNG deal with QatarEnergy; from 2026, 1.5 billion cubic meters per year will be delivered to a floating terminal in Piombino, Tuscany.
Russia: Gazprom says it will supply extra gas to Hungary this winter and also provide China with an additional 600 million cubic meters this year on top of contractual obligations.
UK: Greenpeace UK intends to appeal the dismissal of its legal challenge by a High Court judge who ruled that the UK government’s issuing of new North Sea oil and gas licenses was legal without assessing their end-use emissions.
U.S.: The Alaska Industrial Development and Export Authority, which held oil and gas leases in the state’s North Slope that were canceled by the U.S. Interior Department in September, is taking legal action against the Biden administration to overturn the decision.
Mountain Valley Pipeline delayed again, over budget again: Equitrans Midstream, the lead partner of the Mountain Valley Pipeline, has notified the U.S. Securities and Exchange Commission (SEC) of a further delay to the project’s commissioning date as well as a US$600 million increase in its estimated price tag to US$7.2 billion. Citing a range of “unforeseen factors” in its SEC filing, including workforce issues, challenging terrain and geology, and enhanced safety and security measures, the company said that it is aiming to have MVP in service sometime in the first quarter of 2024. The original completion date was late 2018, at roughly half the cost of the current running total. Despite the project’s backing from the Biden administration and the U.S. Supreme Court earlier this year, one key issue that may result in further delay concerns the integrity and safety of pipeline sections that, critics suggest, have deteriorated due to prolonged exposure to the sun. The U.S. Pipeline and Hazardous Materials Safety Administration (PHMSA) and MVP have come to an agreement that stipulates increased — and independent — oversight during the pipeline’s remaining construction. “This pipeline is not only objectively useless — it poses a mortal danger to people living on the route,” commented Denali Nalamalapu, of the Protect Our Water, Heritage, Rights coalition. “MVP is a fracked gas pipeline blaming workers for why it hasn’t been able to complete the project during a climate crisis.” (The Roanoke Times, E&E News)
IEA issues more warnings for the gas industry: In its annual flagship publication, the “World Energy Outlook,” the International Energy Agency (IEA) is for the first time projecting global demand for coal, oil, and gas to peak this decade based on current policy settings. Under this Stated Policies Scenario (STEPS), which would lead to 2.4°C of temperature rise, gas demand rises marginally to 2030 and then largely plateaus to 2050. The agency estimates at the same time that due to growth in renewables, global gas demand in 2040 is due to be lower than previously forecast. With Europe leading the way in consumption cuts and demand due to peak in all forecast scenarios by 2030, the report states “there is little headroom remaining for either pipeline or LNG trade to grow beyond then.” Flagging stranded asset risk amid a widely anticipated excess global supply of LNG from 2025, the IEA further predicts “While the sponsors of all LNG projects currently under construction can expect to fully recover their initial capital investment in the STEPS, around two-thirds of these projects are at risk of not doing so in the [Announced Pledges Scenario], and up to 75% could fail to do so in the [Net Zero Emissions] Scenario.” (IEA, Bloomberg)
Afreximbank supports another Nigerian gas project: The African Export-Import Bank (Afreximbank) has signed a seven-year loan agreement with Nigeria’s Alphaden Energy & Oilfield Limited for the construction of a 20 million cubic feet per day gas processing facility in Bayelsa State. The funding from Afreximbank was reported variously but could amount to US$60 million for a project that will supply gas to domestic customers. Speaking at a signing ceremony during African Energy Week in Cape Town, Afreximbank director Rene Awambeng commented: “We are committed to funding projects. This is just the beginning. There is still a long way to go and we are committed to gas development.” In June this year, the bank also signed an agreement to get behind the development of Nigeria’s first indigenously owned floating LNG facility in Akwa Ibom State. (Vanguard, Pumps Africa, Afreximbank)
Energy majors alliance reports higher green spend as Shell cuts low-carbon workforce: The Oil and Gas Climate Initiative (OGCI) — composed of Aramco, BP, Chevron, China National Petroleum Corporation, Eni, Equinor, ExxonMobil, Occidental, Petrobras, Repsol, Shell, and TotalEnergies — has released figures showing collective investment in 2022 of US$24.3 billion on low-carbon technologies, including renewables and carbon capture and storage (CCS), up 66% compared with 2021. Renewable energy accounted for over half of this though overall the total represented roughly 5% of the US$476 billion net income earned by the companies in a year of record high prices. Spending on CCS tripled year on year. OGCI also reported a drop in methane emissions to 1 million tonnes, down from 1.3 million tonnes in 2021 and over 2 million tonnes in 2017, while operational emissions fell 5% to 590 million tonnes of CO2. Meanwhile, Shell is to make 15% staff cuts in its Low Carbon Solutions division as part of CEO Wael Sawan’s refocusing on hydrocarbons. The company’s hydrogen business will bear the brunt of the cuts while the renewable power, CCS, and nature-based solutions businesses will not be impacted. (Eco-Business [registration required], Oil and Gas Climate Initiative, Reuters)
Major Indonesian LNG project creeps forward: Following Shell’s protracted departure from the proposed US$20 billion Abadi LNG terminal in July this year, majority Japanese stakeholder Inpex Corporation and its new project partners — Indonesia’s Pertamina and Malaysia’s Petronas — are reported to be aiming for a FID in mid-2026, at least seven years behind schedule. Inpex is seeking approval from Indonesia’s authorities for the 9.5 million tonnes per year export facility that is due to be sited on the island of Yamenda in the Arafura Sea, north of the Indonesia-Australia maritime border. However, uncertainty over how to execute the project, which will also involve a carbon capture and storage component, is continuing. The use of a floating storage and regasification unit in combination with the main onshore terminal is now planned and may mean that a 170-kilometer underwater pipeline from the Masela offshore block, which would have to run close to one of the world’s most active fault lines, is being dropped. Indonesia’s planned shift to greater domestic gas use has been boosted, though, by the shipping of a first LNG cargo — bound for Aceh, in the far west of the archipelago — from the delayed, US$12 billion Train 3 expansion project at the BP-led Tangguh LNG terminal in West Papua province. (Asia Times, GEM.wiki, Upstream)
Both sides of U.S. pipeline politics: Two U.S. federal agencies are adopting starkly different approaches to the nation’s gas pipeline infrastructure. A unanimous decision from the Federal Energy Regulatory Commission (FERC) to approve a capacity expansion for TC Energy’s 1,300 mile Gas Transmission Northwest XPress Project, which will dramatically increase the volume of fracked gas transported from British Columbia to the U.S. West Coast, was met with outrage from climate advocates and Democrat politicians alike. Although an application from groups for a rehearing will block construction until the appeal is resolved, Jeff Merkley, Democrat Senator for Oregon, reacted by describing FERC as a “completely captured agency” and “one huge rubber stamp” for fossil fuel projects. The Democratic Governor of Washington state said he was discussing legal options to block the project that is seen as a major blow to climate efforts in the region. The U.S. PHMSA, on the other hand, has been on the receiving end of pushback from the oil and gas industry over its efforts to start — after decades of thwarted attempts — regulating 400,000 miles of gas “gathering lines” across the U.S. Many of these as yet uncharted pipelines carry gas directly from drilling sites and run mostly through rural areas before hooking up to processing plants, which then pump the gas through large interstate pipelines to population areas. The expansion of fracking has introduced much bigger, more leaky, and more dangerous lines. More stringent rules to be introduced next year for the operators of bigger gathering lines are intended to significantly improve safety oversight. (DeSmog, E&E News, Inside Climate News)
Queensland coal seam gas — farmers fight back, Lock the Gate Alliance, October 2023.
This four minute video shows how Australian farmers are standing up to plans from Arrow Energy, owned by Shell and PetroChina, to drill 7,500 gas wells in some of the most productive farmland in Queensland.
The next Union list for hydrogen projects — The fossil fuel industry wish list coming true? Food & Water Action Europe, October 25, 2023
This short analysis of a leaked EU list of priority projects in line for public funding finds among other things that all of the 68 hydrogen transmission projects have been proposed by the fossil fuel industry. A document with the projects included in the leaked list is here.