Hot on the heels of the recent decision by Shell and its partners in the LNG Canada project to press ahead with the scheme, industry leaders meeting in London this week have highlighted the need for green lights to be given for additional proposed worldscale LNG export initiatives without delay.
Failure to act, they say, raises the spectre of an LNG supply crunch by the mid-2020s. The concerns of the top-ranking officials from global oil and gas companies were aired at the 39th annual Oil & Money Conference, held in London on 9-11 October.
It did not surprise old LNG hands at the conference that those supporting prompt final investment decisions (FIDs) on new projects are people leading companies prepared to do just that. By stealing a march on their competitors, they aim to consolidate market share while ensuring an LNG supply shortfall does not occur.
Presenting the event’s opening keynote speech, Qatar Petroleum (QP) president and chief executive Saad Sherida al-Kaabi outlined his company’s plans to boost LNG production capacity at Ras Laffan in northern Qatar by over 40%, from the current level of 77 mta to over 110 mta by 2024.
This major step-up in output will be achieved by constructing four new super trains of 7.8 mta each. Expansion in output was assessed following the April 2017 lifting of the Qatari Government’s 2005 moratorium on developing its giant offshore North Field.
The initial expansion project agreement, to build three super trains, was superceded in a September 2018 decision to add a fourth unit, following an upbeat assessment of market needs.
Since loading its inaugural cargo in December 1996, Ras Laffan has safely dispatched more than 12,500 cargoes to global markets. There are currently 14 trains in operation at the LNG complex, including six super trains.
The Ras Laffan expansion is not the end of QP’s ambitions to boost global LNG supplies. The company, together with its partners ExxonMobil and ConocoPhillips, is to take an FID on constructing liquefaction facilities at its Golden Pass LNG import terminal in eastern Texas in the next few months.
Mr al-Kaabi told journalists on the sidelines of the Oil & Money Conference that the plan to make Golden Pass a bi-directional facility involves constucting three liquefaction trains, each of 5.2 mta. QP holds a 70% stake in Golden Pass, while ExxonMobil and ConocoPhillips control 17.6% and 12.4% shares, respectively.
Front-end engineering and design work is currently underway for the Ras Laffan expansion project and an FID is targeted by “the end of 2019”. In contrast, the green light for the Golden Pass LNG export scheme by QP and its partners could come, as mentioned, as soon as “within the next few months”.
Shell chief executive Ben van Beurden, the LNG Canada project leader, was also present at the Oil & Money Conference. He told delegates that the OK for the scheme was facilitated by the intensive work done to bring down construction costs, carried out during the lull created by unpromising conditions in the LNG market back in 2016 and an agreement at the time to postpone a mooted FID.
Project costs for LNG Canada are expected to come in at US$1,000 per tonne of annual LNG production capacity. The terminal is being built at Kitimat in British Columbia, 1,400 km north of Vancouver, and, assuming a four-year construction cycle, could be producing LNG by early 2023. LNG Canada is the largest greenfield LNG export project to be sanctioned since Yamal LNG in 2013.
The Shell chief went on to say that the 14-mta LNG Canada initiative will not be enough to meet the growing demand for LNG, reiterating the need for early decisions on further new projects. Whereas the overall global demand for energy is forecast to grow at 1% per year through 2030, the requirement for LNG is set to rise by 4% annually.
Proponents of early green lights for additional LNG export projects will be heartened by the progress currently being made by Novatek in Russia, Anadarko in Mozambique and several further ‘second wave’ US terminal developers besides Golden Pass towards FIDs on new schemes.