Demand for gas will continue, but oil is going nowhere
The Global Strategy panel The continued rise of natural gas and LNG explored why gas is essential in creating a resilient, low-carbon and high-growth future.
Fatema Al Nuaimi, CEO of ADNOC Gas began by explaining that gas addresses all three points in the energy trilemma – security, sustainability and affordability.
“I love the sense of certainty in the title of this session, and I agree that gas is going to continue to grow. It provides security of supply, affordability and to some extent it produces lower emissions when compared to other fossil fuels,” she said.
“This is why my job is so immensely exciting. Gas is growing, and demand is rising.”
Al Nuaimi went on to describe the rapid progress that has been made within ADNOC gas, and why Ruwais LNG is redefining LNG production.
“The UAE was the first in the Middle East to invest in LNG, and Ruwais LNG is the first facility in the Middle East to run on clean power, including a mix of electric and solar from Masdar. It has been thrilling to watch it grow. We have signed 8 SPAs within 18 months, and the last one was completed just an hour ago.”
Matthew Schatzman, Chairman and CEO of NextDecade said he had noticed that demand for gas is growing in Southeast Asian, Europe, the US and the Middle East, and that this is mainly because of the security it offers.
“We are seeing a lot of demand for industrial energy that is available around the clock. It has taken around five years, but the market is starting to realise that natural gas is really the perfect fuel to fulfill this type of energy demand,” he said.
“NextDecade is now constructing one of the largest LNG facilities in the United States in Texas, and ADNOC is a customer of ours and an investor in the project.”
Chris Ashton, CEO and MD of Worley added to this by saying that a country’s interest in gas often depended on its policies, and how much the government encourages and supports investment in it.
He declared that jurisdictions should carefully assess which energy forms will work best for them, and be open to using a combination of different ones. He added that gas is ideally suited to jurisdictions that are heavily industrialised and looking for a source of secure, affordable energy.
“When it comes to the energy transition, the pragmatists always say that it is about using more than one type of energy, not one instead of the other. For instance in Australia they use a lot of wind and solar because these resources are readily available, but this is not the case everywhere in the world,” he said.
“I think every jurisdiction needs determine what makes sense for them in terms of affordability and security of supply.”
Schatzman agreed with this point, noting that no company should try and do it all.
“The key is not to be forced to do all of it in every scenario. You should let the economics decide which energy supply you need,” he explained.
“If you need firm, baseload energy, I think the answer is natural gas and possibly nuclear. If you need intermittent intermediate energy, it may make sense for you to have wind and solar batteries mixed in.
Look at the demand that you are trying to satisfy and let the economics dictate what you develop.”
Meanwhile, Arnaud Pieton, Executive Director and CEO of Technip Energies added that the most important thing for the gas sector was winning the “affordability battle”.
“Every sustainable solution we put out there must be affordable. LNG is successful because it's affordable. It wouldn’t be so successful if it was expensive,” he said.
“Gas will continue to grow but oil will not go away. We, and many others, believe that by 2035 the total capacity for LNG will exceed 900 million tonnes. We are currently at 500 so we still need a lot of investment. Europe has nearly completed its transition from coal to gas, but that's only a small region, and even there it is viewed as a source of flexibility.”
Al Nuaimi put forward that it was a waste of time to debate which kinds of energy will be phased out: “We need all types of energy, But gas is differentiating itself by providing what the world needs today, especially when it is used in a complementary role with solar and other renewables.”
When asked about the lessons that the pandemic and the recent global conflicts have taught the gas sector, she noted that it had made the industry “go back to the basics” and that this was an “essential requirement in order for humanity to grow”.
“There are still two billion people living in energy poverty and 700 million people who don't have access to electricity. I think LNG has an opportunity to level this out,” she concluded.
“All of the challenges that have occurred in recent years have only emphasised the role of gas and the importance of gas and security. We are accustomed to a life where constant power is a given, and guaranteed. For instance, we're not just going to accept that we can’t have power when it’s windy or it's cloudy outside.”
The panel ended with Pieton reminding the audience that flexibility was essential, and that improved infrastructure was required before the energy transition can fully take place.
“Completing the energy transition, decarbonization and lowering the carbon index or the carbon intensity of certain products will not happen in a flip of a switch. It requires proper infrastructure and supply chains. Structures must be built, and we need to train up people to build them,” he declared.
“For instance, at Technip Energies, our project sites are becoming massive training schools. Over the past few years, we have lost quite a lot of employees who have the competencies and skills we need, and it's our responsibility as contractors to train people up.”
