Global Flaring Intensity by Country

This data-file tabulates global flaring intensity in 16 countries of interest: in absolute terms (bcm per year), per barrel of oil production (mcf/bbl) and as a contribution to CO2 emissions (kg/boe).

Flaring intensity has reduced by c20% in the past quarter-century, from 0.25mcf/bbl and 12.5kg of CO2/bbl in the early 1990s to 0.2mcf/bbl and 10kg/bbl today. However, total flaring nevertheless increased by c13% in absolute terms, accounting for 350MTpa of global CO2 emissions. This is 1/6th of total oil industry CO2.

Industry leaders, with the lowest flaring include Saudi Arabia and the US. Laggards include West Africa, North Africa, Iran/Iraq and Venezuela (which has shown the worst deterioration in the database, since the late 1990s).

LNG’s positive role in reducing flaring stands out from the data. LNG exports were 94% correlated with Nigeria’s flaring reduction since NLNG started up in 1999. Angola has also reduced flaring by 80% since 1998, with Angola LNG “starting up” in 2013. Finally, Equatorial Guinea now has 80% lower flaring than its neighbor, Gabon, since starting up EGLNG in 2007.

Breakdown of global CO2 emissions

This data-file breaks down global CO2 emissions into 35 distinct categories, based on prior publications, our own models and calculations.

The long tail illustrates the complexity of decarbonisation. The largest single component of global emissions is passenger vehicles, but this comprises just c14% of the total CO2e.

A further 30 line-items all account for at least 1% of the world’s total emissions including electricity, heating, cement, metals, plastics, food, fertilizers, paper, manufacturing, livestock, agriculture, military, oil refining, fossil fuel production and landfill.


The Ascent of Small Scale LNG?

Large LNG projects make large headlines. But we are excited by the ascent of smaller-scale LNG. At <1MTpa each, these facilities can be harder to track, which is the objective of this data-file.

There is currently c13MTpa of small-scale LNG liquefaction capacity online, across 70 facilities, of which c50 are in China and c10 in the US. A further c12MTpa pipeline is in progress, for a 100% increase.

We estimate small-scale LNG supplied c0.2MTpa of shipping fuel in 2017, compared to c260MT of total liquid shipping fuels. Dedicated LNG shipping fuels capacity should rise 20x, to 4MTpa by the end of 2021; and total shipping fuels could reach 40MTpa by 2040.

Exciting projects are currently ramping up: in Russia, Novatek’s Vyotsk (1.1MTpa) and Gazprom’s Portovaya are both devoted to Baltic shipping fuels (1.5MTpa) and sourced from the same input gas as Nord Stream; followed in the US Gulf, by Florida’s Eagle LNG (0.9MTpa) and in Louisiana.

Small-scale LNG growth is particularly exciting around European markets, where by 2022 there will be 5x more port-side facilities than a decade prior.

For all the underlying data, please download this data-file. For our research on this theme, please see the note, ‘LNG in transport: scaling up by scaling down’.

Investing for an Energy Transition

What is the best way for investors to drive decarbonisation? We argue a new ‘venturing’ model is needed, to incubate better technologies. CO2 budgets can also be stretched furthest by re-allocating to gas, lower-carbon oil and lower-carbon industry. But divestment is a grave mistake.

Production profiles: renewables vs oil and gas?

Wind, solar, oil and gas are all capable of supplying comparable energy at comparable prices: 5c/kWh wind and solar is economically competitive with c$50 oil and $6/mcf gas, over a 30-year project-cycle.

But production profiles matter. Oil and gas assets generate 2-3x more energy than renewables in early years; and 50-80% less energy in later years. So dollars invested in oil and gas go 2-3x further in the short-run. To meet the same initial demand from renewables, one must currently spend 2-3x more.

Further renewables deflation of c50-70% is required before the world can truly “re-allocate” capital from fossil fuels to renewables without causing near-term shortages. In the mean time, it is necessary to attract adequate capital for both resource types.

This short data-file underpins the chart and considerations discussed above.

Gas industry CO2 per barrel?

We have constructed a simple model to estimate the CO2 emissions of commercialising a gas resource, as a function of eight input variables: such as production techniques, methane leakage, sour gas processing, LNG liquefaction, LNG tanker distances and pipeline distances.

We estimate energy return on energy invested is c25-30x across piped gas resources and c15x across LNG resources, compared with c7-10x for oil. This supports the rationale for oil-to-gas switching, as commercialising gas will likely emit 50-75% lower CO2 per boe.

Different resources are compared using our methodology. The lowest CO2 profile is seen for well-managed piped gas (e.g., Norway to Europe).

Download the model and you can quickly compute approximate CO2 emissions for other resources.

Long-Term LNG Demand: technology-led?

This is a simple model of long-term LNG demand, extrapolating out sensible estimates in the world’s leading LNG-consuming regions. On top of this, we overlay the upside from two nascent technology areas, which could add 200MTpa of potential upside to the market. Backup workings are included.

Long-Term LNG Supply: Path-Dependent?

Our LNG supply model looks project-by-project, across 115 LNG facilites: including c40 mature plants, c15 under development, c20 in design and c30 under discussion.

Our base case supply estimates come from “risking” the supply associated with each of these projects (chart below).

The outlook depends on the path. The 2030 supply outlook can vary by 250MTpa, when comparing all reasonably possible supply (top chart) against the firm supply-growth that looks all but locked (bottom chart).

The greatest opportunities in LNG are therefore to create new demand and to advance competitive projects when others are cannot. To see which projects we think will progress, please download the data-file.


US Shale Gas to Liquids?

We have reviewed 42 of Shell’s GTL patent filings for 2018. They show continued progress, innovating new fuels, lubricants, renewable-heavy gasolines, waxes and detergents. Each patent is summarised and categorized in this data-file.

All of this begs the question whether there is a commercial rationale for a US replica of the Pearl GTL project, to handle the over-abundance of gas emanating from the Permian; and produce these advantaged products. It would also help reduce the risk of US LNG projects glutting the market.

We therefore model the economics in this data-file, using prior project disclosures and our learnings from the patent history. Our base case IRR is 15%, taking in 1.6bcfd of shale gas. Resiliency is tested by varying oil and gas prices.

Pre-Salt Brazil: FPSO Tracker

This data-file tracks the construction progress of 30 FPSOs that are being deployed in the Brazilian pre-salt oil province. In each case, we quantify the vessel’s oil and gas handling capacity, development timing and recent news.

We also compare the FPSOs’ gas-handling capacity with regional pipeline capacity. There will only be room to monetize one-third of the pre-salt’s produced gas volumes by the mid-2020s. The rest  must be re-injected (chart below).