Platform supply vessels: what contribution to CO2?

This data-model calculates the contribution of Platform Supply Vessels (PSVs) to an offshore oil and gas asset’s emissions profile, as measured in kg/boe.

Our base case estimate is 0.1kg/boe for a productive asset in a well-developed basin. The numbers can be increased c4x in a remote basin, or by another c4x for smaller fields, so emissions >1kg/boe are possible.

Initatives to lower these emissions by 10-20% through LNG-fuelling or hybridization are described in the final tab. They will likely save 0.01-0.02kg/boe from most PSVs and other supply vessels.

Molten Carbonate Fuel Cells: capture carbon, generate electricity?

Molten carbonate fuel cells (MCFCs) could be a game-changer for CCS, and fossil fuels. They are electrochemical reactors with the unique capability to capture CO2 from the exhaust pipes of combustion facilities; while at the same time, efficiently generating electricity and heat from natural gas. The first pilot plant is being tested in 1Q20, by ExxonMobil and FuelCell Energy. Economics range from passable to phenomenal. The opportunity is outlined in this 27-page report.

Molten Carbonate Fuel Cells: CCS plus Power? The Economics?

Molten Carbonate Fuel Cells could be extremely promising, generating electrical power from natural gas as an input, while also capturing CO2 from industrial flue gases through an electrochemical process.

We model competitive economics can be achieved, under our base case assumptions, making it possible to retrofit units next to carbon-intensive industrial facilities, while also helping to power them.

Our full model runs off 18 input variables, which you can flex, to stress test your own assumptions.

Gas-to-Power Project Economics

This data-file models the economics of constructing a new gas-to-power project, using simple or combined cycle gas turbines, based on technical papers and past projects around the industry.

A dozen input variables can be flexed in the model, to stress test economic sensitivity to: gas prices, power prices, carbon price, gas distribution costs, conversion efficiency, capex costs, opex costs, utilization and tax rates.

Indicative inputs, and sensible ranges, are suggested for each of these input variables in the data-file.

Sensitivity to utilization rates is particularly interesting, as requisite power prices could be doubled if gas is marginalized as a ‘backup fuel’ to renewables; the model seems to support a role for gas in baseload generation.

Shell: the future of LNG plants?

Shell is revolutionizing LNG project design, based on reviewing 40 of the company’s gas-focused patents from 2019. The innovations can lower LNG facilities’ capex by 70% and opex by 50%; conferring a $4bn NPV and 4% IRR advantage over industry standard greenfields. Smaller-scale LNG, modular LNG and highly digitized facilities are particularly abetted. This note reviews Shell’s operational improvements, revolutionary greenfield concepts, and their economic consequences.

Illustrative LNG Economic Model

This simple, illustrative model for an LNG project’s economics, facilitates stress-testing of economic assumptions, and their impact on IRRs and NPVs.

The InputsOutputs tab allows you to flex key variables such as: LNG sales price, Capex/tpa, Opex/mcf, Utilization, Thermal Efficiency, LNG shipping distance, LNG tanker rates, and liquids cuts.

A base LNG case project is likely to earn a c7% real, unlevered IRR. The economics are most sensitive to gas pricing and capex; and somewhat less sensitive to the other variables.

European Natural Gas Demand Model

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 conclusion is 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 model to run your own scenarios…

 

 

Hybrid horizons: industrial use of batteries?

Gas and diesel engines can 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 cars are 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.

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.

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’.