This model estimates European gas demand in the 2020s, as a function of a dozen input assumptions, which you can flex. They include: renewables’ growth, the rise of electric vehicles, the phase out of coal and nuclear, industrial activity, efficiency gains and LNG-transport fuel.
Our conclusionis that European gas demand will likely grow at its fastest pace since the early-2000s, largely driven by the electricity sector.
The data-file also contains granular data, decomposing gas demand across 8 major categories, plus 13 industrial segments, going back to 1990 (albeit some of the latest data-points are lagged).
Please download the modelto run your own scenarios…
Gas and diesel enginescan be particularly inefficient when idling, or running at 20-30% loads. At these levels, their fuel economy can be impaired by 30-80%. This is the rationale for hybridizing engines with backup batteries: the engines are always run at efficient, 80-100% loads, including to charge up the batteries, which can better cover lower intensity energy needs.
Hybrid passenger carsare the best known example, since Toyota re-introduced them in the late 1990s. c25-30% energy savings are achieved, including through engine down-sizing and regenerative breaking
Industrial applications are also increasingly taking hold as battery costs come down, achieving even higher, 30-65% energy savings. This data-file summarizes a dozen examples, from oil and gas, marine, construction and even the machinery at LNG plants.
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.
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 fuelin 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.
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.
Energy return on energy invested is c20x across piped gas resources and c10x across LNG resources, compared with c7-10x for oil. This supports the rationale for oil-to-gas switching, as commercialising gas will likely emit 0-80% lower CO2 per boe; plus 15-20% lower combustion emissions.
Different resources are compared using our methodology. The lowest CO2 profile is seen for well-managed piped gas (e.g., Norway to Europe). Actual data on US LNG facilities and methane intensities have been added.
Download the modeland you can quickly compute approximate CO2 emissions for other resources.
This data-file summarises six leading CO2-separation technologies. For each one, we outline the process, its technical maturity, costs, CO2-selectivity, energy-intensity and drawbacks. Our notes and workings are also included in subsequent tabs.
A $50/ton carbon price would be neededto incentivise more CCS, using today’s conventional, technically mature methods. The problem remains, that these means suffer from energy penalties of 15-30%.
Metal Organic Frameworkscould be a material breakthrough, with c60-80% lower costs and energy penalties. These remarkable materials can contain 10,000m2 of surface area in a single gram, with impressive tuning to adsorb specific gases. Our file contains new notes on MOFs, including the technology leaders: 4 listed companies, 5 start-ups and 225 patents from 2018-19.
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.
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 estimatescome 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 LNGare 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.
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 economicsin 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.