Liquefied natural gas (LNG) production is expected to increase by 70% by 2030. Hundreds of billions of dollars are invested in the sector, and countries striving for carbon neutrality also sign long-term LNG supply contracts .
Bloomberg reports that 200 million tons of additional natural gas export capacity will hit the market over the next five years thanks to new LNG projects already underway. According to calculations by oil and gas firm Baker Hughes Co, LNG production capacity could increase to 300 million tonnes by 2030 if early-stage projects get the green light from investors.
In total, LNG production volumes could increase by 70% in the next six years, and the growth may not end in 2030. Therefore, production volumes of the LNG sector, which has been developing for 60 years, can almost double in less of a decade.
Until the 1960s there were no alternatives for gas export other than pipelines. But then a technology was introduced that consisted of cooling the gas to -160 degrees Celsius. At this temperature the gas changes to a liquid state and the same amount of gas takes up 600 times less space, which allows it to be exported on special ships. It’s LNG.
The rapid growth of LNG production was aided by Russia’s full-scale invasion of Ukraine in February 2022. After the invasion, the Kremlin decided to drastically limit gas supplies to the European Union, using the energy as an economic weapon.
However, the EU has managed to resist the gas blackmail thanks to a sharp increase in LNG supplies from places other than Russia: the Community’s LNG imports increased by 60% in 2022.
“Putin thought he could use gas as a weapon to break up the pro-Ukrainian coalition. That failed largely thanks to LNG,” S&P Global Vice President Daniel Yergin told Bloomberg.
In total, companies, institutional investors and governments have invested $235 billion since 2019 to increase LNG production. Energy research firm Rystad Energy expects another $55 billion in investment in LNG production this year and next. In total, this is an amount comparable to Finland’s gross domestic product (GDP) for one year.
Although LNG covers only 3% of global energy demand, its share is expected to increase in the coming years. This is despite the growth in renewable energy production.
One of the largest suppliers of LNG is China, and its supply volumes are growing rapidly. However, the EU has also signed long-term contracts to supply LNG to Qatar even after 2050, when the association has set itself the goal of achieving climate neutrality.
Although the EU is investing in renewable energy and hydrogen production, the transition has not been easy so far. The offshore wind farm sector has been hit by rising commodity prices, high debt rates and long-term supply chain problems, causing some development projects to stall or even cancel. wind farms. A similar case also occurred in the United States, the most famous of which concerned the Orsted wind farm construction project in the state of New Jersey.
However, the United States will not be a large importer of LNG, but the country with the largest increase in LNG exports in the world, due to the steady growth of shale gas production. According to the U.S. Federal Energy Regulator (US FERC), there is more than 100 million tons of new LNG export capacity under construction or development in the United States.
Proponents of natural gas have often touted it as a transition fuel to replace coal in situations where renewable energy capacity is not yet ready. According to the International Energy Agency, producing the same amount of electricity from gas results in 50% fewer carbon emissions than producing electricity from coal. At the COP28 climate meeting in Dubai, gas CEOs managed to successfully promote the use of gas as a transition fuel, ensuring that support for the use of gas as a transition fuel reached the summit resolution.
However, studies conclude that methane, a component of natural gas, affects climate warming 80 times more than carbon dioxide. Methane enters the atmosphere when natural gas escapes without burning.
According to a study by the US National Academy of Sciences (NAS), natural gas harms the climate more than coal if at least 3.2% of the gas is lost during production or transportation.
However, a study using satellite data found that the largest gas field in the United States has a methane leak rate of 4.6% throughout the natural gas production and transportation process.
2024-01-11 11:12:00
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