the research consultancy for energy technologies
Modelling Europe’s gas balances currently feels like grasping at straws. Yet this 10-page note makes five predictions through 2030. We have revised our views on how fast new energies ramp, which gas gets displaced first, which energy sources are no longer ‘in the firing line’, and gas pricing.
Scope 4 CO2 reflects the CO2 avoided by an activity. This 11-page note argues the metric warrants more attention. It yields an ‘all of the above’ approach to energy transition, shows where each investment dollar achieves most decarbonization and maximizes the impact of renewables.
This database aims to calculate the Scope 1, 2, 3 and Scope 4 emissions of different energy sources, fuels and decarbonization investments, on a bottom up basis. The numbers vary vastly, from -1.25 kg/kWh to +1.25 kg/kWh, and offer a more constructive view for funding decarbonization initiatives.
Specifically, we take examples in coal, oil, gas, biofuels, wind, solar, nuclear, hydrogen, CCUS, EVs, heat pumps and forestry. Next we calculate the Scope 1&2 CO2 emissions involved in producing the energy product. Then we calculate the Scope 3 CO2 emissions involved in using the product. Finally, we deduct the Scope 4 CO2 emissions that are avoided via using this energy product versus the most likely counterfactual.
For example, generating 1 MWH of power from coal emits 1.15 tons of CO2. Generating that same 1 MWH of power from natural gas emits 0.45 tons of CO2, resulting in a net saving of 0.7 tons of CO2. Thus $1bn invested in natural gas power plants, debatably, will save over 100MT of total CO2 over the lifetime of the plant. This is actually more than the 40MT of total lifetime CO2 that will be saved by investing $1bn into wind or solar.
Looking at the numbers in these terms is instructive, as it will promote an ‘all of the above’ approach to decarbonizing global energy.
Decision-makers may wish to use numbers in the data-file to illustrate the Scope 1-4 CO2 associated with investment decisions and production. In many cases, there is a good argument that energy investments will offer net CO2 reductions on a Scope 1-4 basis.
The file calculates full Scope 1 – Scope 4 emissions of different energy sources, in kg/boe, kg/kWh, tons/ton, tons/$bn and TWH/$bn metrics for all the different energy products. We are also happy to help TSE subscription clients explore bespoke cuts of the data. We have also published back-up research on the philosophy of CO2 accounting.
Dispersion in global gas prices has hit new highs in 2022. Hence this 17-page note evaluates two possible solutions. Building more LNG plants achieves 15-20% IRRs. But shuttering some of Europe’s gas-consuming industry then re-locating it in gas-rich countries can achieve 20-40% IRRs, lower net CO2 and lower risk? Both solutions should step up. What implications?
Global gas prices by country are often measured at the world-famous delivery points for liquids futures contracts, such as Henry Hub and the Netherlands’ TTF.
This data-file aims to take a broader approach, aggregating the annual gas prices by country across twenty different geographies.
Covered countries include Argentina, Australia, Brazil, Canada, China, Colombia, Egypt, India, Japan, Kazakhstan, Nigeria, Oman, Qatar, Russia, Saudi Arabia, Singapore, Trinidad, the UAE, the United States and the European region.
Taking a straight-line average, we think that wholesale global gas prices averaged $4/mcf in 2016-19, with an interquartile range of $2-6/mcf, or in other words, a period of exceptionally low and stable gas prices.
Conversely, 2021-22 has seen gas prices rise, but most of all, it is the dispersion in gas prices between different countries that has risen most, reaching all-time records well above $35/mcf.
There are still half a dozen countries enjoying sub-$2.5/mcf wholesale gas in 2022, while each month has seemingly brought an all time record gas price in Europe. We have discussed the implications of this trend in our recent research note here.
Headline statistics on global gas prices by country are calculated in $/mcf in the data-file: including averages, standard deviations, standard errors, ranges and inter-quartile ranges.
Further research on global gas prices, sent out to our distribution list is linked here.
This data-file captures the marginal cost of developing new gas fields in the UK North Sea and in Europe more broadly, by modelling the Jackdaw HPHT project costs.
Shell took a final investment decision to develop the field in 2022, targeting over 40kboed of production after start-up in 2025. We have reviewed the field’s environmental impact statement and modelled its production, capex, opex, tax and cash flows.
Our first conclusion is around strong economics. At $7/mcf gas and $60/bbl oil, we think the IRR at the development will surpass 30%. A $10/mcf long-term gas price uplifts this to a 40% IRR. The project has a surprisingly low break-even and can be resilient even below $4-5/mcf.
The risk, however, is not so much with prices as with implementation. The environmental impact statement gives a base case of 75Mboe of saleable resource, within a P10-P90 range that varies by 3x, from 40Mboe to 110Mboe. The reservoir is a complex array of turbidites, containing fluids at 191ºC and 17,000 psi, including 35-45 API gas condensate, 17% wax with a 46ºC wax appearance temperature, 4.2% CO2 and 30ppm H2S. To state the obvious, a field that fails to produce is going to face large potential write-offs. So it is delivery, not gas prices, that will mostly dictate economics.
Environmental credentials of the field are relatively strong. We were able to construct a build-up of total CO2 intensity from disclosures in the EIS (chart below). Shell’s target is to produce 6% of the North Sea’s gas for 1% of its CO2. Peak CO2 emissions during production will be 130kTpa, which has been reduced from 280kTpa in initial designs (details in data-file). We think total life CO2 intensity will be something around 14kg/boe, which is in line with some of the lowest-carbon gas resources in our broader screens around the CO2 intensity of producing natural gas.
To stress-test the economics (IRRs, NPVs) around Jackdaw HPHT project costs, including gas prices, opex, capex, development delays, and other variables, please download the data file.
The North Field is now the most important conventional energy asset on the planet. It produces 4% of world energy, 20% of global LNG and aims to ramp another 50MTpa of low-carbon LNG by 2028. But what if Qatar’s exceptional reliability gets disrupted by unforeseen conflict with Iran? Without wishing to catastrophize, this 18-page note explores important tail-risks for near-term energy balances and long-term energy transition.
This data-file aggregates production from Qatar’s North Field (aka Iran’s South Pars), plus associated data, based on technical papers and other commentaries that have crossed our screen, covering this enormous 1,260 TCF resource, which straddles the Qatar-Iran border.
We think total production at the North Field has more than doubled to 43bcfd in the past decade, including a 3x ramp-up from the Iranian side to 25bcfd, which is now more than total production from the Qatari side.
Intensifying, competition seems to coincide with Qatari plans to ramp up their own production from the field, but also with lower well productivities.
Backup data are also presented on the relative military strengths of GCC nations and Iran, as tail risks are increasingly important to decision-makers in global LNG markets.
World’s largest energy assets by type. The size and risk of global energy assets are assessed in this data-file, which focuses in upon the largest energy assets in the world, the energy derived from them (in TWH) and their resultant risk profiles. Our workings and conclusions are presented in the data-file.
For example, the analysis includes a description and a risk assessment for each of: the world’s largest oil terminal (1,100TWH pa of useful energy supplied to the world), the world’s largest LNG plant (700TWH pa), oilfield (650TWH pa), oil pipeline (500TWH pa), gas pipeline (400 TWH pa), refinery (200TWH pa), coal mine (200TWH pa), hydro plant (100 TWH pa), nuclear plant (50TWH pa), offshore wind farm (4TWH pa) or solar asset (4TWH pa).
The main risks for large assets are one-offs, such as outages, political disputes and outright sabotage. But the energy industry is also shifting to smaller assets (renewables, shale), where the main risks are systemic ones that impact all assets, such as particularly non-windy years or possible kamikaze policies such as fracking bans. Climate change likely also creates higher risks to energy security due to drier weather and hurricanes.
Overall, the analysis suggests it is not unrealistic to fear that global energy supplies could come in 2% lower than base case models, which are linked here.
Further discussion on the world’s largest energy assets, and our conclusion on a particularly large and important gas, oil, shale, nuclear, wind and solar assets are linked here.
Some of the top public companies in energy transition are aggregated in this data-file, looking across over 1,000 items of research into the energy transition published to date by Thunder Said Energy.
The data file should be useful for subscription clients of Thunder Said Energy, if you are looking for a helpful summary of all of our research to-date, how it reflects upon public companies, and links to explore those companies in more detail, across our other research.
Specifically, the file allows you to filter different companies according to (a) listing country (b) size — i,e., small-cap, mid-cap, large-cap, mega-cap (c) Sector — e.g., energy, materials, capital goods, OEMs (d) TSE resarch — and whether the work we had done made us incrementally more optimistic, or cautious, on this company’s role generating economic returns while advancing the energy transition.
A back-up tab then reviews all of our research to date, going back to 2019, and how we think that specific research conclusion might impact upon specific companies. This exercise is not entirely perfect, due to the large number of themes, criss-crossing a large number of companies, at a large number of different points in time. Hence the observations in this data-file should not be interpreted as investment recommendations.
The screen is updated monthly. At the latest update, in September-2022, it contains 285 differentiated views on 148 top public companies in energy transition.