LNG2023 brings the entire industry together to discuss the critical changes [LNG2023]
The LNG2023 conference in Vancouver last month offered the opportunity for the entire natural gas industry to come together to discuss the critical challenges that the world energy market faces, Paul Marsden, president of US EPC firm Bechtel’s Energy global business unit, tells NGW. First and foremost among those challenges is striking a balance between energy security, affordability and availability – no easy feat given the market’s turbulence over the past few years.
A global pandemic that shut the global economy down, followed by a fast-paced recovery and then the war in Europe, has disrupted markets and supply chains, as well as assumptions about energy planning, Marsden says. The LNG industry, where Bechtel is a leading developer of liquefaction, storage and regasification facilities, has seen its fair share of that volatility.
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“Very mature, established supply chains became very rapidly disrupted,” Marsden says. “Big producing industries in Southeast Asia effectively shut down during the pandemic, raising the question of where all this contracted LNG can go to,” he says. “Then we reemerge from the pandemic, with global economies roaring back to life, and the next question is where is the LNG we really need.”
Then came Russia’s invasion of Ukraine. Europe, once reliant on Russia for 40% of its gas, has had the majority of that supply cut over the past year, prompting a scramble for more LNG and the construction of infrastructure to import it at breakneck speed. There was heightened demand globally for LNG as major US producers that previously sent most of their LNG to Asia began diverting it to Europe.
“Overlaid on top all of that, you had all the very, very bold climate commitments. But energy demand is increasing, and ultimately, we’re coming to terms with the fact that the reliability of renewables doesn’t match up to baseload hydrocarbon-generated power,” Marsden says. “Essentially, the pendulum swung too far towards lofty ambitions and net zero, but without the technology or supply chains to deliver that. But then, with demand for energy coming back, we’ve gone back to what we know, which in some cases meant turning coal plants back on, which was a huge step backwards.”
Now with the market showing early signs of rebalancing, there is a greater sense of clarity, Marsden says. This is evident in how the oil and gas majors have restated their ambitions, clearly stressing that hydrocarbons are here to stay.
“We need to focus on being more energy efficient. We need to focus on using cleaner hydrocarbons. We need to modernise our facilities and reduce their emissions,” he says. “And focusing on that, it’s quite incredible what you can achieve in terms of reducing carbon intensity without making our energy system vulnerable as it has been in the last couple of years.”
LNG2023, he says, “gives the whole industry the opportunity to all come together to talk about those challenges, including the supply chain, the operators and the customers buying the products.”
Maintaining a social licence
LNG has a critical place in the energy mix for decades to come, Marsden says, stressing its value as a cleaner source of baseload power versus coal, with modern combined-cycle gas turbines producing three times less stack emissions than coal plants.
How should LNG retain its social license going forward? Marsden believes there’s too much focus on addressing the 5% of natural gas used in combustion at liquefaction plants, using costly technologies such as e-drives and carbon capture, and not the 95% of emissions associated with the end use of the fuel. Ongoing innovations in gas-fired power generation will be crucial for dealing with the latter.
“Modern combined-cycle power is incredibly efficient,” he says, citing the recent launch of SSE Thermal’s Keadby 2 power plant in the UK that has a thermal efficiency of 63%. “You can add carbon capture to those facilities, but it’s a lot of cost that ultimately has to be borne by the consumer, who has already been hit by high inflation and high energy prices. Suggesting to the consumer you have to pay more to make this power a little bit cleaner is probably not going to land very well.”
Marsden sees further scope for additional innovation in combined-cycle technology to make it cleaner and more efficient, pointing to the electric vehicle industry as an example where rapid technological advancement has taken place in the space of a mere decade.
As an EPC contractor, Bechtel works with operators to improve project efficiency and limit the environmental impact, while also engaging with suppliers to ensure they are using the best technology available, Marsden says. The company also focuses on its own emissions from construction activities, seeking ways to use less fuel and more electrification. And these efforts can also save Bechtel money, he says.
Bechtel also takes heed of the social impact of its operations, the executive notes.
“We build big stuff, but we also build big legacies. So, when we leave the community, we leave that community with healthier supply chains and an upskilled workforce. We put services and jobs in that area in a sustainable way, so that when we leave, there isn’t a vacuum.”
COVID-19 was a major disruptor of the global labour market, which posed another challenge to the industry.
“When the world woke up from its COVID slumber, and you had all this government stimulus put back into economies to revive them,” he says. “All that has created a huge appetite for building new infrastructure. We don’t have the workforce to go build everything we want to build.”
“We’ve got to focus on how we do more work with less people – that’s not about being more productive but being smarter.”
Greater automation and mechanism has a role to play, he says. So does increased modularisation, where work can be spread across different parts of the world. But this is not as robust a solution as it used to be, as the labour shortage is a global problem. With a reduced pool of available workers, the focus should be on attracting more young people into the market.
One step Bechtel is taking to do this is by establishing programs with local schools and colleges to develop comprehensive programs that will grow a skilled workforce, benefiting local regions for many years to come, he says.
This interview was originally published in the LNG2023 Daily, produced by NGW during the LNG2023 conference in Vancouver July 10-13.