In this issue

 

For several Arab states which border the Persian Gulf, deploying Floating Storage and Regasfication Units (FSRU) to import LNG is a need, not an option. Benefitting from its geographic proximity of Qatar, and plentyfold new supply on global markets from United States and Australia, buyers in Kuwait, the UAE, Egypt, Jordan and increasingly also in Bahrain getting ready to absorb some of the surplus. 

The United States and China have reached a landmark agreement designed to reduce America’s growing trade deficit and promote LNG shipment to China. US Commerce Secretary Wilbur Ross underlined the deal was part of a broader effort to remodel the relationship between the world’s two largest economies. 

LNG-to-energy solutions, notably for distributed power, have made Wärtsilä one of the biggest supplier of gas- and liquid fuel-fired power stations in the 5 - 600 MW range. Such baseload and/or grid stability plants are used predominately as ‘wind chasers’ and ‘sunset balancers’, compensating for intermittent supply of renewable energy – soon also on the island of Aruba. 

LNG development in British Columbia has created a paradox: people want investment in their communities, however, there is uncertainty associated with long-term environmental and social effects. These non-technical risks, if not managed, can stop a project in its tracks. To manage these uncertainties, Environmental Assessment (EA) processes are followed; these were developed to identify and predict both positive and negative effects of a project on the environment and society and are required for projects above a certain size and complexity. 

South America’s demand for natural gas is forecast to grow by some 50 Bcm to reach 191 Bcm by 2030, as overall energy demand increases and more gas-fired plants are being installed to balance renewable power supply. However, the region’s potential to develop its LNG market remains largely uncertain, and is very much linked to local weather scenarios. 

Shell, Total and others are advancing small-scale LNG-to-power projects across Southeast Asia. An ultra-shallow draft LNG carrier by Philippines-based Atlantic, Gulf & Pacific Co. (AG&P) will be a key driver for executing such projects. 

Electricity will make up about 25% of final energy consumption by 2040, as estimated by the International Energy Agency (IEA). Brushing climate concerns aside, Richard Zhang, technology executive at GE’s Power Conversion business says electrification would not just help reduce emissions, but also offer significant cost and efficiency savings. 

Third-party access (TPA) to regasification terminals is offered for over 420 mtpa, or 54% of global regas capacity, but in practice such access still rarely happens outside Europe. In Japan, for example, TPA exists on paper notably on the basis of ‘bilateral negotiations’ – in practice, however, incumbents do often not respond to any query of a third party. Regulators would need to enforce full or partial TPA, analysts argue, to help aspirations of creating an Asian gas trading hub become a reality. 

Aspiring to one day develop an LNG industry, the Canadian province of British Columbia is supporting plans by TransCanada to ship its gas via pipeline to border towns like Toronto to compete in the US market instead of shipping LNG cargoes to Seoul, Tokyo and Shanghai. Conclusion of the tender fills up most of TransCanada’s idle pipeline capacity – a move seen to improve the competitiveness of Canadian natural gas which had lost out on price compared to US shale gas. 

Demand for LNG keeps rising globally, as the super-chilled gas becomes a fuel of choice in new markets such as shipping, transport and heavy-horsepower machinery. In its annual World LNG Report, the International Gas Union (IGU) pointed out the fast rise of LNG-powered tankers, with 31 newbuilds delivered in 2016 from shipyards to the LNG shipping fleet. 

The Administration of President Donald Trump is taking an interest in the Alaska LNG project with US Vice-President Mike Pence meeting Alaska Governor Bill Walker and officials during a stop-over. The venture itself on April 17 filed for regulatory permits. 

Demand and market need will decide whether US LNG developer Excelerate Energy will take delivery of all seven floating storage and regasification units (FSRUs) that it has ordered from Daewoo Shipbuilding and Marine Engineering of South Korea. It has the option to order the first FSRU as early as Q2-2017. 

Working gas storage in the United States as of March 31 stood at 2,051 billion cubic feet (Bcf), ending the most recent gas year around 15% above the five-year average. Responding to slightly higher prices, gas consumed in electric power generation fell 2.1 Bcf from the 2015–2016 heating season, but the drop was almost entirely offset by a 2.0 Bcf increase in US gas exports, according to data from PointLogic. 

As an array of LNG export projects is coming onstream; the Oxford Institute of Energy Studies (OIES) has been evaluating ‘clearing mechanisms’ to reduce the oversupply in global gas markets. Coal-to-gas switching in Europe is being seen as an option, as is US LNG curtailment. 

News Nudges

Engie, AES jointly market LNG in Central America

Engie of France and AES have entered into a joint venture to market and sell LNG to third parties in Central America. The JV will utilize the Costa Norte LNG regasification terminal, currently under construction with a capacity of 1.5 million tons per annum (mtpa). Approximately 25% of the Costa Norte LNG regas capacity will supply fuel to a 380MW combined-cycle gas power plant in the city of Colón, Panama. Costa Norte LNG, owned 50/50 by AES and Inversiones Bahía, is currently under construction in Colón; whereas AES owns the Colón CCGT that is being build nearby the regas facility. ENGIE committed to supply up to 0.4 mtpa of LNG to the gas power station starting from 2018. The remaining capacity of the Costa Norte regas terminal is primarily available for the joint venture to market and sell to third parties. This includes up to 0.7 mtpa of LNG sourced from ENGIE mainly through the Cameron gas liquefaction project in the United States. In a joint statement, Engie and AES said their joint venture would reinforce their joint marketing agreement signed in the autumn of 2016. Hereby both groups agreed to jointly market LNG in the Caribbean, from AES’ Andres regasification facility in the Dominican Republic. The combined regasification capacity of Andres in the Dominican Republic and Costa Norte in Panama is approximately 3 mtpa.