Current global trends favour shift to natural gas
Current global trends favour a shift to natural gas as catalyst for industrial and economic transformation with international oil companies (IOCs) and hydrocarbon-rich countries beginning to trim their oil exposure.
“Global energy consumption will increase in the future but on the other side of the fence and that is where gas comes in. Oil will still be in demand but (particularly as a source of power) will go down by about 50 per cent”, said Tony Attah, managing director, Nigeria LNG Limited at the recent Nigeria International Petroleum Summit (NIPS).
Attah said a combination of factors would give gas an edge as the preferred energy of the future, adding that the global LNG trade was projected to nearly triple, from about 12Tcf in 2015 to around 31Tcf in 2040. Also, the International Energy Agency (IEA) forecasts natural gas consumption will rise 45 percent by 2040 as oil demand growth slows and coal consumption nears a halt.
Nigeria appears set to hike on the gas train. The Nigerian National Petroleum Corporation (NNPC) plan to ramp seven critical gas development projects (7CGDP) scheduled to deliver about 3.4billion standard cubic feet of gas per day on an accelerated basis to bridge a projected medium term supply gap by 2020.
The projects, according to Maikanti Baru, group managing director of the NNPC, while delivering the Oil Industry address at the annual Society of Petroleum Engineers’ Oloibiri lecture series include development of the 4.3 Trillion cubic feet (TCF) Assa North/Ohaji South field, the 6.4 TCF Unitized Gas fields (Samabri-Biseni, Akri-Oguta, Ubie-Oshi and Afuo-Ogbainbri) and the 7TCF NPDC’s OML 26, 30 & 42. Others include the 2.2 TCF Shell Petroleum Development Company, (SPDC) JV Gas Supply to Brass Fertilizer Company, cluster development of 5 TCF OML 13 to support the expansion of Seven Energy Uquo Gas Plant and the cluster development of 10 TCF Okpokunou/Tuomo West (OML 35& 62).
Western oil majors have continued to rebalance their upstream portfolio towards natural gas. Wood Mackenzie estimates that over the past decade, two-thirds of commercial hydrocarbon discoveries by the world’s top oil majors were gas of which half was US shale.
Chevron and Eni, in particular, made significant strides in reducing their exposure to oil in 2017.
Chevron brought on stream two major LNG projects in Australia last year, bringing its oil exposure in line with BP at 63 percent. The start-up of Indonesia’s Jangkrik LNG project and Egypt’s giant Zhor field saw Eni pump more gas than oil on a barrels of oil equivalent basis for the first time in 2017.
Shell, already the world’s biggest LNG player with half of its upstream volumes made up of gas, could boost the share of its gas flows to triple that of oil by 2050, Ben van Beurden, its chief executive said recently.
BP, Europe’s second-biggest oil major, is entering significant upstream growth phase fueled by the start-up of large gas projects, including the Khazzan tight gas project in Qatar, Zohr offshore Egypt, and Shah Deniz Stage 2 in Azerbaijan. The company is also sitting on large unconventional gas reserves in the US where production costs continue to fall, and it plans to invest $1 billion in an LNG project off Mauritania and Senegal.
FRANK UZUEGBUNAM