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September 28, 2023
Issue 54  |  View Past Issues
Inside Gas
Published by Global Energy Monitor

Editor's Note

Big Gas in Australia and the national offshore regulator are finding out the hard way about the legal requirement to properly consult Indigenous stakeholders on offshore projects. Despite pleas from Woodside Energy that it’s hemorrhaging serious money due to delays in starting seismic testing — or blasting — on its Scarborough project, a federal judge sided with a Traditional Owner who argued that approval for the blasting was granted in the full knowledge that the company turned up and told her community what was going to happen. It’s a similar story with Santos’ still stalled Barossa project, which is attracting strenuous objections from another Indigenous community one year on from a court ruling that suspended the company’s drilling program.

The International Energy Agency’s update to its Net Zero Roadmap has downsized methane’s place within the energy transition, noting that last year’s price turbulence has provoked growing skepticism about the fuel's affordability, “especially among some import-dependent emerging market and developing economies.” This is playing out in real time in South Korea, where the dominant utility has brought in a new CEO to stave off a potential corporate death spiral aggravated by coal and LNG import dependency. 

Europe’s success to date in sourcing enough non-Russian gas to avert an energy crunch this winter, one commentator points out, may be dampening the need to tap additional gas from Azerbaijan. As the grim accounts of the humanitarian crisis in Nagorno Karabakh mount following last week’s storming of the region by Azerbaijani forces, so too does the questioning of senior EU officials’ judgment in turning last year to the regime in Baku, a supposedly “trustworthy” energy supplier. 

Grieg Aitken

Features

Where next for EU relations with “trustworthy” energy supplier in Baku? 

Even before Azerbaijan launched a military offensive to retake the territory of Nagorno Karabakh, triggering a mass exodus of Armenians from their homeland, serious doubts were emerging over the commercial viability of plans hatched last year for Baku to double its gas exports to the EU, writes David O’Byrne in Eurasianet.

The “environmental nightmare” of fracking waste comes increasingly to the surface

A legal battle over a failed wastewater treatment plant in West Virginia is one of many problematic cases arising from loosely regulated efforts to manage the massive cleanup from toxic fracking across several U.S. states, writes Justin Nobel in DeSmog

Redistribute a fraction of record petrostate profits to avoid another toothless COP outcome  

An immediate US$25 billion global windfall levy on oil and gas profits, to be paid by the richest petrostates, alongside similar guarantees that can be leveraged by the multilateral development banks, would be a shot in the arm for floundering commitments to finance climate mitigation and adaptation in the global south, writes former UK prime minister Gordon Brown in The Guardian

Carbon capture and — climate solution?

New multi-billion dollar subsidy schemes for carbon capture and storage projects are triggering a flurry of deals and euphoric oil and gas industry claims, but the evidence from twelve large-scale projects shows cost overruns, missed emissions reduction targets, and enhanced extraction of hydrocarbons, write Michael Buchsbaum and Edward Donnelly in DeSmog.

Major Gulf Coast LNG terminal is the Biden administration’s Keystone XL moment — and more

In the next few weeks, the U.S. Department of Energy will decide on whether to grant a crucial export license for the country’s largest currently proposed LNG export terminal. Approval requires finding that such a license for the Calcasieu Pass 2 project is in “the public interest” when the overwhelming evidence in neighboring Louisiana communities and elsewhere is that it is not, writes Bill McKibben in The New Yorker.

Top News

Australian court blocks Woodside’s seismic blasting for Scarborough offshore project: The Federal Court of Australia has ruled in favor of a legal challenge brought by a Traditional Custodian, Mardudhunera woman Raelene Cooper, against an official approval for Woodside Energy to proceed with seismic blasting on the Scarborough gas project off the West Australian coast. Federal court justice Craig Colvin agreed with Ms Cooper that the National Offshore Petroleum Safety and Environmental Management Authority made a legal error when it approved Woodside’s seismic testing plan despite having found that the company’s consultation with traditional owners had been inadequate. The judgment leaves the company’s survey plan for the A$16.5 billion (US$10 billion) extraction project halted indefinitely. “This is bigger than me,” said Cooper after the verdict was delivered. “It’s about my people and our history. We’ve been forgotten and treated so badly. I want the old people to remember we are warriors. I’m a warrior and my family are warriors.” (Environmental Defenders Office, The Guardian) 

International Energy Agency expects deeper cuts to gas in the energy transition: In the new update to its Net Zero Emissions (NZE) by 2050 report, the International Energy Agency (IEA) makes it clear that “A large and sustained surge in clean energy investment is what removes the need for new fossil fuel projects in the NZE scenario.” Rapid growth in major energy transition technologies — solar power and electric vehicles in particular are already developing in line with the IEA’s net zero pathway — are cited alongside a reiteration of the need for no new gas extraction. Driven by continuing clean energy gains and a resulting decline in gas power generation dependency, the updated NZE roadmap cuts global gas demand in 2030 by roughly 10% lower than previously, and 45% lower in 2050. On the supply side, the agency’s new long-term projection of global gas supply is cut sharply to 900 billion cubic meters per year (bcm/y) in 2050, an almost 50% reduction from the first NZE’s 1,750 bcm/y. The estimate for 2030 has now fallen to 3,400 bcm/y from 3,700 bcm/y previously. Explaining this, the IEA states that “price spikes in 2022 have shaken confidence in natural gas as an affordable alternative to coal or oil, especially among some import-dependent emerging market and developing economies.” (International Energy Agency, Reuters)

New evidence shows the accuracy of Eni’s climate breakdown warnings from the 1970s: Four months on from their filing of a climate lawsuit — Italy’s first such case — against Eni, archival research from Greenpeace Italy and ReCommon has uncovered further evidence that 50 years ago the oil and gas major was predicting, among other things, that human-induced atmospheric changes could “gradually cause the disappearance of all life on earth.” The warning came in a 1973 report from Tecneco, a new company in Rome set up by Eni to study pollution problems. By 1978, Tecneco was baldly stating the dangers of CO2 pollution derived from fossil fuel combustion and estimating a 0.5 °C rise in atmospheric temperature by 2000 that duly materialized. The groups contend that, in spite of these and numerous other documented warnings, Eni continued and continues to invest mainly in the extraction and exploitation of oil and gas. They also describe in the “Eni Knew” report how, by the late 1980s, the company’s membership in the International Petroleum Industry Environmental Conservation Association led to Eni falling in line with the industry body’s obfuscation of climate science and delaying tactics. (Greenpeace Italy and ReCommon [Pdf], DeSmog)

EBRD urged to stop funding gas: As the European Bank for Reconstruction and Development prepares to finalize a new strategy to guide its energy sector financing over the next five years, 130 organizations from more than 40 countries have called on the multilateral development bank to align the strategy with the requirements of 1.5 °C by fully excluding finance to fossil fuels. At issue, the groups argue in a public statement, is the potential for the EBRD — as outlined in a draft of the strategy — to continue to support new midstream and downstream gas projects such as pipelines and gas-fired power plants. Acknowledging the draft strategy’s declared climate ambition, including scaled up support for renewables and energy efficiency, as well as the exclusion of support for midstream oil and oil-fired power generation, the groups have urged the bank to “fully exclude” new gas investments from next year onwards. In the 2018–2021 period, the EBRD invested €2.9 billion (US$3 billion) in the fossil fuels sector, chiefly for gas, making it the third biggest funder of fossil fuels among all multilateral development banks, behind the World Bank Group and the Islamic Development Bank. (International Institute for Sustainable Development [Pdf])

Complaints lodged with UK advertising regulator over tidal wave of cruise industry LNG greenwash: In the face of a growing number of major investments by international cruise companies in LNG-ready or reliant ships, which are being advertised as “climate friendly” in the burgeoning cruise market, the UK-based NGO Opportunity Green has submitted complaints to the UK’s Advertising Standards Authority arguing that the companies’ sustainability messages could be misleading consumers. Accompanying the complaints, a new report from the group presents the increasing evidence suggesting that LNG has devastating implications for the climate. Approximately 60% of new-build cruise ship capacity will rely on LNG for primary propulsion, the report says, with three out of four cruise companies that control most of the cruise market — Carnival Corporation & plc, Royal Caribbean Group, and MSC Cruises — using the fuel on their ships. The report concludes that there are grounds to suspect that identified claims could fall foul of relevant regulations for advertising: the use of LNG reduces emissions; the fuel itself is environmentally friendly, and; the use of LNG will aid in reaching net zero by 2050. (Opportunity Green [Pdf], Climate Home News)

The new normal of “monster fracks” threatens Texas’ water supply: An investigation by The New York Times has revealed how the U.S. oil and gas industry’s use of increasingly complex fracking extraction techniques across production areas, especially in the state of Texas, is placing an immense strain on the country’s already endangered water aquifers. According to A.J. Kondash, an environmental scientist at the nonprofit research organization RTI International, “As the easier-to-extract areas are tapped to their full potential, you need to use more and more desperate measures.” Horizontal drilling, involving wells that stretch thousands of feet sideways, has become more commonplace and is more water-intensive than standard fracking. Overall water usage at fracking wells, needed to fracture bedrock, has increased sevenfold since 2011, the Times reports. Such projects have become known as “monster fracks” and account for almost two out of every three fracking wells in Texas. While companies insist they are trying to minimize their use of freshwater, official state estimates point to recycled water making up as little as 15% of the water used for fracking in the Permian Basin. Meanwhile, with worsening drought conditions in Texas and elsewhere bringing more and more official water restrictions for residents, fracking activity is largely left to continue unabated. (The New York Times)

“The oil and gas industry, as a whole, clearly isn’t doing enough to cut emissions … At the moment, companies aren’t making the transition at a fast enough pace to achieve net zero by 2050,” 

said Carine Smith Ihenacho, chief governance and compliance officer at Norges Bank Investment Management, Norway’s sovereign wealth fund, which owns a larger share of global stocks than any other investor.

News

Australia: Labor unions and Chevron reached an agreement that should see the formal cancellation of industrial action by workers at the Wheatstone and Gorgon LNG terminals once final details over improved pay and conditions are hammered out. 

Belgium: Dutch utility Eneco has canceled construction of the 870 megawatt Manage Seneffe gas-fired power plant, commenting: “The plant is no longer part of our strategy to be CO2 neutral by 2035 and we are looking for other forms of sustainable flexibility.”

Canada: British Columbia’s Environmental Assessment Office has fined TC Energy C$346,000 (US$256,000) for deficiencies with erosion and sediment control measures during construction of the 670-kilometer Coastal GasLink pipeline and for filing false and misleading reports related to maintenance inspection records.

Estonia: The country’s former president Kersti Kaljulaid has resigned from the board of energy group Alexela in protest over the firm’s sourcing of Russian liquefied petroleum gas, currently a non-sanctioned product in Estonia and Europe.

Europe: A pan-European media investigation has revealed that since the signing of the Paris climate agreement the continent’s commercial banks have supported companies expanding oil, gas, and coal production via bond issues that have raised over €1 trillion (US$1 trillion) in new capital.

Netherlands: The Dutch government has confirmed that production at Groningen, Europe’s largest gas field, will completely stop on October 1. 

Pakistan: After failing in June to secure LNG supplies, Islamabad has issued a tender that seeks to buy two cargoes on the spot market before the end of the year. 

South Africa: High LNG prices have forced a freeze of energy company Sasol’s plans to introduce the fuel in order to reduce its reliance on coal at the Secunda coal-to-oil plant, the world’s largest single-site emitter of greenhouse gases.  

South Korea: QatarEnergy has signed a US$3.9 billion shipbuilding deal with HD Hyundai Heavy Industries for the supply of 17 LNG carriers, taking its total number of new vessels to be delivered from South Korea to 77.

UK: Rosebank, the North Sea’s largest undeveloped oil and gas field (comprising 10% gas reserves), has been greenlighted by the UK regulator. The project will likely face a legal challenge to test its compatibility with the UK’s net zero emissions law.  

UK: TotalEnergies is looking to sell its remaining 40% stake in a handful of gas fields within the Greater Laggan Area in the North Sea. 

U.S.: Data analysis from E&E News shows that the U.S. Bureau of Land Management has approved more oil and gas leases on federal lands during President Joe Biden’s first two years and seven months in office than were approved during the same amount of time under former President Donald Trump. 

U.S.: The Federal Energy Regulatory Commission approved Semper’s Port Arthur LNG Phase 2 expansion project in Texas and expansion of Venture Global’s Calcasieu Pass LNG terminal under development in Louisiana.

Companies + Markets

Queensland government rejects Blue Energy’s Galilee Basin expansion plans: The State Government of Queensland has rejected nine applications by Australian oil and gas explorer Blue Energy to develop unconventional gas fields in the Galilee Basin. The company said that the state authorities had not been satisfied that the resources under review for extraction “would be likely to become commercially viable within the next 15 years.” Ellen Roberts of environmental group Lock the Gate welcomed the decision, commenting: “It’s the second time the Government has rejected applications by Blue Energy to develop unconventional gas fields in Queensland with the company’s Wide Bay-Burnett fracking attempts thwarted due to strong community resistance in 2019.” Lock the Gate also called on the state government to refuse similar Blue Energy licenses in central Queensland’s Bowen Basin. (InQueensland, Lock the Gate)

“Santos are like a pest” — problems mount for A$5.6 billion Barossa project: One year after a landmark ruling by the Federal Court of Australia halted development on the Barossa gas project offshore the Northern Territory after it was found that Santos had not properly consulted affected Tiwi Islanders, the project remains mired in uncertainty with problems stacking up. Santos plans to restart drilling in December, but legally required consultation with another Indigenous community is reported not to be going well. Following a recent community meeting on Croker Island, 230 kilometers north-east of Darwin, thirteen Minjilang people compared the energy company to “a pest” in a statement that also expressed opposition to the project moving forward. With no approvals currently in place to conduct drilling, a separate report from the Institute for Energy Economics and Financial Analysis (IEEFA) has reinforced the precariousness of Santos’ stated timelines for the project, described by IEEFA energy finance analyst Kevin Morrison as “the most carbon dioxide-laden gas field that will be used as a feedstock for LNG production in Australia.” The IEEFA report points out that the contract on the drill rig Santos hired for the project is due to expire in October and that the rig has now been booked elsewhere. (The Sydney Morning Herald, IEEFA)

Coal and LNG imports central to KEPCO’s “unprecedented financial crisis”: Kim Dong-cheol, the new CEO of Korea Electric Power Corporation (KEPCO), has said the utility is facing an “unprecedented financial crisis” due to reaching its debt ceiling. State-owned KEPCO’s debts have spiraled to 201 trillion won (US$151 billion), roughly 30% of South Korea’s annual state budget, largely as a result of elevated prices for coal and LNG imports following Russia’s invasion of Ukraine. The company derives approximately 39% of its total power capacity from coal and 22% from LNG. Kim highlighted the need for KEPCO to expand more into renewable energy, which currently accounts for less than 3% of its power capacity. (Bloomberg, IEEFA) 

TotalEnergies portfolio “diversification” claims questioned: Despite declarations from TotalEnergies that it’s diversifying its energy mix away from hydrocarbon production, the French energy major has announced to shareholders that it plans to grow its oil and gas production by 2–3% per year over the next five years, primarily from LNG. Prior to Total’s annual strategy and outlook presentation, the Paris-based NGO Reclaim Finance warned that the company’s energy transition claims were misleading, and outlined in an investor briefing how existing plans to grow LNG production by 40% over the period 2020 to 2030 would result in oil and gas making up 80% of TotalEnergies’ energy mix by 2030, compared with 20% from low-carbon sources of energy. Following the announcement of the new plans by CEO Patrick Pouyanne, the group said that this entails a 50% jump in LNG production between now and 2030. Ahead of the investor presentation, Reclaim Finance also singled out the proposed Papua New Guinea LNG export terminal that TotalEnergies is spearheading and called on French bank Crédit Agricole to withdraw from its financial advisory role for the “climate bomb” project. (Reclaim Finance [Pdf], LNG Prime, GEM.wiki)

Further delay at BP’s African export project: Having pushed start-up of the US$4.6 billion Greater Tortue Ahmeyim (GTA) floating LNG export terminal only last month to the first quarter of 2024, BP is facing a further delay after McDermott International exited the project over a payment dispute. BP is understood to have replaced the U.S. contractor with Saipem and Allseas who will complete subsea pipelay work offshore Senegal and Mauritania. This latest construction delay on the 2.5 million tonnes per year floating terminal is likely to result in first cargoes to Europe being shipped no earlier than the beginning of next year. (Bloomberg, GEM.wiki)

Egypt ramps up exploration: Amid worsening blackouts caused by insufficient fuel supply at the country’s gas-fired power plants, Egypt has awarded licenses for four oil and gas exploration areas to Eni, BP, QatarEnergy, and Russia’s Zarubezhneft. The companies are expected to invest at least US$281 million and drill up to twelve wells, according to state resources. Eni won two areas in the Mediterranean Sea and will share a third with BP and QatarEnergy. Zarubezhneft won the right to drill in the Nile Delta. Egypt’s petroleum ministry launched a further international bidding round for oil and gas oil exploration in 23 new areas: ten in the Western Desert, two in the Eastern Desert, seven in the Gulf of Suez, and four in the Red Sea. (Upstream, Reuters)

“Traditional energy companies are hugely important to the global economy, they are hugely important to Goldman Sachs … We are all going to continue to finance traditional companies for a long time,” 

said David Solomon, CEO of Goldman Sachs.