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 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 our 27-page report.
Pages 2-4 outline the market opportunity for more efficient carbon separation technologies, which can be retrofitted to 4TW of pre-existing power plants, without adding $50/T of cost and 15-30% of energy penalties per traditional CCS.
Pages 5-13 outline how MCFCs work, including their operation, development history, how recent patents promise to overcome reliability problems, and their emergent adaptation to carbon capture.
Pages 14-18 assess the economics, both in absolute terms, and by comparison to new gas plants and hydrogen fuel cells. CCS-MCFC economics range from passable to phenomenal, at recent power prices.
Pages 19-23 suggest who might benefit. FuelCell Energy has received $60M investment from ExxonMobil, hence both companies’ prospects are explored.
Appendix I is an overview of incumbent CCS technologies, and their limitations.
Appendix II is an overview of six different fuel cell types, comparing and contrasting MCFCs.
Shale growth has been slowing due to fears over the energy transition, as Permian upstream CO2 emissions reached a new high in 2019. We have disaggregated the CO2 across 14 causes. It could be eliminated by improved technologies and operations, making Permian production carbon neutral: uplifting NPVs by c$4-7/boe, re-attracting a vast wave of capital and growth. This 26-page note identifies the best opportunities.
Pages 2-5 show how fears over the energy transition have slowed down shale growth in 2019.
Pages 6-10 disaggregate the CO2 intensity of the Permian, by source and by operator, based on over a dozen models we have constructed.
Pages 11-15 argue why increased LNG development is the single greatest operational opportunity to reduce Permian CO2 intensity.
Pages 16-18 summarise advances in methane mitigation technologies and their impacts.
Pages 19-23 outline and quantify the best opportunities to lower CO2 from digital initiatives, renewables, lifting and logistics.
Pages 24-25 quantifies the sequestration potential from CO2-EOR, which could offset the remaining CO2 left after all the other initiatives above.
Our conclusion is to identify three top initiatives that companies and investors should favor. Industry leading companies are also suggested based on the patents and technical literature we have reviewed.
Gas demand could treble by 2050, gaining traction not just as the world’s cleanest fossil fuel, but also the most economical. The ascent would be driven by technology. Hence this note outlines 200MTpa of potential upside to consensus LNG demand, via de-carbonised power and shipping fuels. LNG demand could thus compound at 8% pa to 800MTpa by 2030, justifying greater investment in unsanctioned LNG projects.
Technology leadership is crucial in energy. It drives costs, returns and future resiliency. Hence, we have reviewed 3,000 recent patent filings, across the 25 largest energy companies, in order to quantify our “Top Ten” patent leaders in energy.
This 34-page note ranks the industry’s “Top 10 technology-leaders”: in upstream, offshore, deep-water, shale, LNG, gas-marketing, downstream, chemicals, digital and renewables.
For each topic, we profile the leading company, its edge and the proximity of the competition.
Companies covered by the analysis include Aramco, BP, Chevron, Conoco, Devon, Eni, EOG, Equinor, ExxonMobil, Occidental, Petrobras, Repsol, Shell, Suncor and TOTAL.
More information? Please do not hesitate to contact us, if you would like more information about accessing this document, or taking out a TSE subscription.
Shell is the leading Major in driving new LNG demand, based on patent filings (chart above). As an example, we highlight a leading new technology to promote LNG demand in transportation, by mitigating the problem of boil-off.
Harnessing better technologies tends to unlock better returns, for large-scale capital projects in a commodity industry.
Hence this 7-page note evaluates ExxonMobil’s technologies for constructing greenfield LNG plants, particularly in remote geographies. Its technical leadership stands out from our analysis of 3,000 patents across the industry. This matters as Exxon progresses new LNG investments in Mozambique, PNG and the US.
Opportunities should arisefor investors in Exxon’s LNG projects, and for its partners, resource-owners and other stakeholders to maximise value.
Multiple records have just been broken for an LNG-powered ship, as construction completed at Heerema’s “Sleipnir” heavy-lift vessel (charted above). It substantiates our recent deep-dive note, which sees 40-60MTpa upside to LT LNG demand, from large, fuel-intensive ships, after IMO 2020.
Sleipnir is a record-setting crane-lift vessel, with capacity to pick up 20,000T. This eclipses the prior records in offshore oil and gas, which were around 12,000T, set by the Heerema Thialf and the Saipem 7000. Hence Sleipnir has already lined up 18 contracts, starting with the 15,800T topsides for Israel’s Leviathan gas field, and progressing on to Johan Sverdrup Phase II.
Sleipnir is a record-setting LNG vessel, burning gas as its primary fuel (although it can also burn diesel). With a displacement of 273,700T, we estimate it is the heaviest LNG-powered vessel ever built (eclipsing the largest such container ships, at 220,000T). With a cost of $1.5bn, we estimate it is also the most expensive LNG-powered ship ever built (eclipsing Carnival’s $1.1bn AidaNova cruise ship). It has the world’s first Type-C LNG tank in an enclosed column. Numbers are updated in our data-file here.
There is upside to LNG demandin large, fuel-intensive ships, especially cruise- and container ships, after IMO 2020. Small-scale LNG may offer an economic “bridge”, while bunkering becomes increasingly attractive as volumes per port scale past c80kTpa. Forward-thinking Majors are already investing to capture the future market.
Finally, for a video of the construction vessel being constructed…
Next-generation technology in small-scale LNG has potential to reshape the global shipping-fuels industry. Especially after IMO 2020 sulphur regulations, LNG should compete with diesel. Opportunities in trucking and shale are less clear-cut.
This note outlines the technologies, economics and opportunities for LNG as a transport fuel, following a three-month investigation.
Why technology matters. Pages 2-4 of the note describe incumbent technologies in small-scale LNG, and the need for superior solutions.
The cutting edge . Pages 5-7 draw on patents and technical papers to describe next-generation technologies, at the cutting edge of small-scale LNG. We model that they are economic. They can can provide LNG to the market at $10/mcf.
Potential to transform shipping-fuels. Pages 9-13 find strong economic upside for novel LNG technologies in the shipping industry, with potential to create 40-60MTpa of incremental LNG demand, looking across the global shipping fleet.
Less positive on LNG as a trucking fuel. Pages 14-15 explain why the economics are more challenging for LNG use in land-transportation, i.e., trucking.
Less positive on LNG use in shale. Page 16 explains, similarly, why LNG is less advantageous in the shale patch than converting rigs and frac spreads to piped gas.
Other technologies. Page 17 notes other companies with interesting offerings in small-scale LNG liquefaction, including advances by Exxon and Shell.
Have further questions? Please contact us and we’ll be happy to help: [email protected]
It would be unwise to under-estimate the complexity of creating a new LNG province, with a 50MTpa prize on the table in Mozambique. After the first two trains are in motion, the longer-term opportunity is potentially “another Qatar”. But only if Mozambique can compete for capital with US greenfields and brownfield expansions.
Hence we have reviewed 200 of Chevron’s patents from 2018. The company’s ability to develop a new, deep-water LNG province is notable. Ten examples are tabulated below.
It was interesting how many of the patents were filed in Australia and may have derived from learnings at Gorgon and Wheatstone.
For a primer on different LNG process technologies, please see our data-file (here).
We have assessed whether gas is a competitive trucking fuel, comparing LNG and CNG head-to-head against diesel, across 35 different metrics (from the environmental to the economic). Total costs per km are still 10-30% higher for natural gas, even based on $3/mcf Henry Hub, which is 5x cheaper than US diesel. The data-file can be downloaded here.
The challenges are logistical. Based on real-world data, we think maintenance costs will be 20-100% higher for gas trucks (below). Gas-fired spark plugs need replacing every 60,000 miles. Re-fuelling LNG trucks requires extra safety equipment.
Specially designed service stations also elevate fuel-retail costs by $6-10/mcf. Particularly for LNG, a service station effectively ends up being a €1M regasification plant (or around $250/tpa, costs below).
We remain constructive on the ascent of gas (below), but road vehicles may not be the best option.
To flex our input assumptions, please download our data-model, comparing LNG, CNG and other trucking fuels across 35 different metrics .