What lies ahead: Will gas and LNG power energy transition engine?
Offshore Energy Today
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The energy transition clutches cannot be escaped, as climate change pushes the need to transform the energy system into a more sustainable one to the top of the global climate action agenda. However, different pathways to low-carbon and greener energy are being pursued, thus, the gap continues to widen between those pushing for a swift end to fossil fuels and the ones who are calling for the further development of oil and gas. Many believe that natural gas and LNG will play a crucial role during the transition journey to a renewable and clean energy future.
Based on the International Energy Agency (IEA) 's latest report, a surge in new LNG projects is expected to ease prices and gas supply concerns, thanks to projects that are coming online from 2025. This rise in capacity is set to add more than 250 billion cubic meters per year of new capacity by 2030, equivalent to around 45% of today’s total global LNG supply.
As the United States and Qatar are expected to account for 60% of this increase, Natural Allies for a Clean Energy Future's roadmap, which envisions using natural gas alongside renewables to secure a clean energy future in the U.S., reach climate goals faster, and provide reliable, affordable energy for the next generations, is likely to reach its full potential in the future.
The IEA's report points out that simply cutting spending on oil and gas will not get the world on track for the net-zero aspirations, as the key to an orderly transition is to scale up investment in all aspects of a clean energy system. The report goes on to highlight the urgent challenge of increasing the pace of new clean energy projects, especially in many emerging and developing economies outside China, where investment in energy transitions needs to rise by more than five times by 2030.
Dr. Fatih Birol, IEA Executive Director, commented: “Every country needs to find its own pathway, but international cooperation is crucial for accelerating clean energy transitions. In particular, the speed at which emissions decline will hinge in large part on our ability to finance sustainable solutions to meet rising energy demand from the world’s fast-growing economies. This all points to the vital importance of redoubling collaboration and cooperation, not retreating from them.”
Qatar, which is expected to be among the front-runners delivering the next wave of LNG growth together with the U.S., sees natural gas as a key piece in the energy transition puzzle and beyond due to renewables’ intermittent nature. The Persian Gulf state's QatarEnergy LNG confirmed the completion of its 1,000th LNG shipment to the South Hook LNG terminal at Milford Haven in the United Kingdom. Thanks to this, South Hook terminal has now received and processed almost 100 million tons of LNG, which is the equivalent of supplying natural gas to every household in the UK for almost five years.
Many players within the energy sector are involved in gas projects, including McDermott International, Ltd , which got its hands on a limited letter of award for work on a gas development project offshore Vietnam, as part of a consortium with PTSC . The full project contract is slated to be executed in early 2024 with an award value of more than $1 billion.
Meanwhile, one of the offshore drilling players, Noble Corporation , has revealed its quarterly results, spotlighting a total backlog of $4.7 billion. The drilling player reached 2,172 total operating days in 3Q 2023, compared to 2,091 in 2Q 2023 and 1,398 in 3Q 2022. The company’s average day rates for floaters and jack-ups totaled $304,040 in 3Q 2023 versus $275,066 in 2Q 2023 and $212,958 in 3Q 2022. This supports the claims of a tightening offshore drilling market and an ongoing upcycle.
"Our outlook for a sustained long-term up-cycle remains well supported by macro factors and customer dialogue. While moderately lower financial results are expected over the next two quarters due to contract sequencing and scheduled downtime, we continue to expect a nice step up in 2024 compared to 2023,” highlighted Robert W. Eifler, Noble Corporation's CEO.
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Senior Editor at Offshore Energy Today
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