- Analysts sounded an alarm for LNG as the production of the superchilled fuel involves a certain amount of greenhouse gas emissions.
- Now, Wood Mackenzie is warning that global energy transition goals could threaten more than two-thirds of the world’s supply of liquefied natural gas.
- It is leaving trillions of cubic meters of gas in resources stranded.
According to a recent news article published in Oil Price, written by Irina Slav, LNG market is growing fast but while considering the more ambitious 2-degree scenario under the Paris Agreement, LNG growth will suffer.
LNG the natural gas
LNG is a form of natural gas that many believe is set for particularly strong demand growth because of its supply flexibility.
While natural gas needs pipeline infrastructure, limiting options, LNG can be bought from anywhere in the world and delivered to a port with a regasification terminal.
2-degree scenario
The so-called 2-degree scenario refers to efforts aimed at curbing the rise in average global temperatures to 2 degrees Celsius.
A less realistic scenario is limiting this rise to 1.5 degrees Celsius.
“In a 2-degree world, only about 145 billion cubic metres per annum (bcma) of additional LNG supply is needed in 2040 compared to 450 bcma in our base case outlook,” said Wood Mac principal analyst Kateryna Filippenko. “And if we consider imminent FID for Qatar North Field East expansion, the space for new projects shrinks to 104 bcma, down 77% from our base case.”
LNG developers have to think
” LNG developers will have a difficult decision to make,” says another Wood Mac analyst, Evgeniya Mezentseva. “On the one hand, there will be windows of opportunities for investment decisions. But on the other hand, the long-term value of these investments might be at risk by the prospects of a shrinking market space combined with competitive pressure from lower-cost producers.”
Doomsday scenario
The forecast detailed by Wood Mackenzie’s analysts is nothing short of a doomsday scenario for the natural gas industry.
Luckily for this industry, the chances of that scenario unfolding are not particularly great, not for lack of ambition but rather for lack of the necessary technological advances that would enable the complete or near-complete replacement of fossil fuels in electricity generation by renewable sources.
Tesla Neoen’s new 300-MW project
The latest major battery storage news is a case in point: Tesla and Neoen’s new 300-MW project in Australia, worth $84 million, will have the capacity to power half a million households for an hour.
We need a lot more storage than that before we can rely exclusively on solar and wind as our principal sources of electricity, which would be a must in a 2-degree world.
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Source: Oil Price
