Industry Investment 'Gears to Gas' : DNV GL
Almost two-thirds of oil and gas sector leaders expect to increase or sustain spending on gas projects in 2018, as the sector prepares for gas to overtake oil as the world’s main energy source in the mid-2030s.
That’s the key finding of Transition in Motion, a special report from global technical advisory firm DNV GL published June 26 at the World Gas Conference in Washington DC and based on the views of 813 senior industry professionals surveyed during October/November 2017 on their outlook for 2018.
The primary driver for investment in gas and LNG projects this year is the global energy transition, the report finds, but the pace of the petroleum industry’s push to lower carbon emissions varies by region: only 33% of respondents in North America (33%) say that their company is actively preparing for the shift to a lower carbon energy mix this year, compared to 51% in Middle East and North Africa. The average worldwide was 44%.
“Society’s transition to a less carbon-intensive energy mix is already a reality, and oil and gas will continue to be crucial components,” said Liv Hovem, CEO of DNV GL’s Oil & Gas division. However, she was less clear about whether the sector’s aspirations will convert into actions, and fast enough, to achieve the Paris climate change targets.
IEA executive director Fatih Birol warned June 25 about methane emissions – saying 76mn mt/yr of methane is still emitted from oil and gas operations "equivalent of about 1.7% of global gas production.”
Among other key findings from DNV GL’s Transition in Motion report are that 24% of respondents think that onshore pipeline projects now under development are adaptable enough to cope with potential long-term changes in the gas mix, such as a wider range of calorific values, hydrogen and biogas - while 13% disagree; also 72% believe that, as traditional coal energy generation becomes obsolete over the coming decades, the long-term attractiveness of gas will significantly improve.
The number of respondents stating that traditional oil and gas prices will decouple in the long-term has increased from 45% in DNV GL’s survey this time last year to 55% this year.
Power generation is predicted to be the primary consumer of gas in most regions, said Norway-based DNV GL. And yet the IEA forecast June 26 that industry will become the largest contributor to the rise in global gas demand to 2023. DNV GL’s report also said that gas production is forecast to double in China, the Indian subcontinent and South East Asia by 2040.
DNV GL's 2017 Energy Transition Outlook forecast that LNG trade from North America to China will grow from 30bn m3/yr in 2017 to more than 85bn m3/yr by the mid-2020s, and that early as 2020 the Panama Canal could be carrying five times the volume of LNG it did in 2017. The full suite of DNV GL's latest report editions will be on its website later in the week.