LNG

Equinor, the Norwegian state energy company and supplier of pipeline natural gas and LNG to Europe, has won 26 new production licences from Norway’s Ministry of Petroleum and Energy in the latest awards for predefined areas.

The awards included 18 licences with Equinor as operator and eight others as a partner to various other energy players.

“The rounds are important, and we are very pleased with the awards,” said Jez Avery, Equinor’s senior vice president for subsurface in Exploration & Production in Norway.

Equinor noted that as the production from existing oil and gas fields declines continued exploration and replenishment is essential to maintaining long-term, important energy deliveries from Norway.

The company said that its analyses show that active exploration activity is the most important single measure to ensure continued value creation towards 2030 and beyond.

Three basins

Equinor's production licences are divided into 16 in the North Sea, nine in the Norwegian Sea and one in the Barents Sea.

The company plans in 2023 to participate in 25 exploration wells, most of them around existing infrastructure.

“Around 80 percent of the exploration wells will be drilled in known, mature areas,” explained Averty

“Discoveries near existing infrastructure require less volume to be commercially developed and can be quickly put on stream and with low carbon-dioxide emissions,” he said.

“We thus maximize the value creation from existing infrastructure that has been developed over a long period on the NCS,” the Equinor executive added.

“Exploration is essential to our ambition to transform the NCS from and oil and gas province to a broad energy province,” he stated.

In total the Ministry offered 47 new production licences in the latest NCS licensing round.

“I was able to offer 47 new production licenses in the predefined areas to a wide variety of companies. Further exploration activity and new discoveries are important to maintain the production of oil and gas over time, both for Norway and Europe,” stated the Minister of Petroleum and Energy Terje Aasland.

The 47 production licenses offered in this year's round are distributed over the North Sea (29), the Norwegian Sea (16) and the Barents Sea (2).

A total of 25 different oil and gas companies, from large international companies to smaller Norwegian exploration companies, were offered shares in one or more of these licences and 12 companies were offered one or more operatorships.

The German government has selected a consortium to jointly develop and deploy a fifth floating import facility offshore the leading European Union economy for liquefied natural gas to replace Russian pipeline gas volumes.

Southwestern Energy Co. the second-largest US natural gas producer, has signed a deal with Uniper to supply the German utility with Responsibly Sourced Gas (RSG) to satisfy the Green and left-wing government in Germany while costing German consumers more for future LNG imports.

Southwestern holds 768,000 net acres in the Appalachian Basin of tghe northeast US and 257,000 net acres in the Haynesville Shale.

The Springs, Texas-based company finished certifying all its Appalachian production earlier in 2022 and expects its Haynesville assets in Louisiana to be certified by the end of 2022.

“Southwestern Energy is strategically positioned to supply the world’s growing energy demands with its responsibly sourced gas,” said Chief Executive Bill Way.

“We believe natural gas is foundational to a low carbon future, and that US natural gas in particular plays a vital role in supporting global energy supply and security,” added the CEO.

As part of the agreement, for which no financial details were released, Southwestern will supply Uniper with RSG for its US midstream gas portfolio that includes domestic distribution to downstream customers.

Analysts said that deals such as this appeared to guarantee that German consumers would pay the most in the European Union for LNG for gas-fired power.

The US company is able to transport the natural gas to US Gulf Coast facilities for liquefaction and export to global LNG markets, though at a premium.

RSG is a natural gas classification created for the Green era that is verified for low-emissions and can give a ready virtual signal as being “environmentally responsible” as the German Greens demand.

Anti-capitalist Greens

The Green coalition partners in the German government have always been opposed to LNG imports and its army of demonstrators have for several years blocked LNG projects in Germany until the Russian gas crisis left no alternative to imports.

Southwestern noted that the agreement represented the first RSG transaction for Uniper in the United States and its second in North America.

“Southwestern is strategically positioned to supply the world’s growing energy demands with its responsibly sourced gas,” said the US company.

“We believe natural gas is foundational to a low carbon future, and that US natural gas in particular plays a vital role in supporting global energy supply and security,” it added.

“This agreement further demonstrates SWN’s differentiated position to reliably deliver responsibly sourced gas both here at home and abroad,” explained CEO Way,

“We’re excited to announce this agreement with Uniper and pleased to provide a critically-needed and low carbon energy solution,” he stated.

Marc Merrill, President and CEO for Uniper in North America, said that transparency in energy production practices is a growing market interest, and agreements like this one are key to deploying responsibly sourced solutions for customers in the US and abroad.

“Southwestern Energy’s reputation as a first-mover in RSG makes it a valued supplier in assisting our customers achieve their critical supply objectives in a responsible manner,” added Merrill.

Shell reported an almost three-fold jump in earnings to $9.1 billion compared with $3.2Bln in the same three months of 2021 as quarterly LNG sales increased along with oil and refined product prices.

April 9 (LNGJ) - Russian natural gas company Gazprom has opened the Mozdok-Grozny gas trunkline to improve supplies to the Chechen Republic, part of Russia's North Caucasian Federal District and which was the subject of two separatist wars from 1994 to 2009. The new gas pipeline crosses under 13 roads and six bodies of water, including the Terek River. An affiliated gas distribution station with an hourly capacity of 247,000 cubic metres was created as part of the project in the North Caucasus region between the Black Sea and the Caspian Sea.

   “Gazprom has been making large-scale efforts for gas supply and gas infrastructure expansion in the region. By the start of this year, the company built over 743 kilometres of gas pipelines in the Chechen Republic and created the conditions for connecting 11,800 households to gas,” stated Gazprom.

Norway, the main West European supplier of long-term pipeline natural gas directly to Germany, France Belgium and the UK, said seven companies had applied for production licences in the 25th licensing round on the Norwegian shelf with any gas finds providing more competition to LNG cargoes from outside the region.

“The numbered rounds are focused on key parts in our least explored, open areas,” said Tina Bru, the Norwegian Minister of Petroleum and Energy.

“They are an important supplement to the APA (awards in pre-defined areas) rounds as exploration activity in immature areas gives the state as a resource owner more knowledge about the resource potential,” explained Bru.

“It enables us to identify resources and create value for the community. We will now start processing the applications from the seven companies,” she stated.

Norway, while being the main pipeline natural gas supplier to Europe, along with Russia’s Gazprom, is in competition to LNG deliveries from nations such as Qatar, the US, Nigeria, Algeria and Trinidad and Tobago, as well as Russia.

The Norwegians are also the only large-scale producers of LNG in Western Europe from the Hammerfest LNG plant, which has been closed until the third quarter of 2021 because of ongoing repairs from a fire in September 2020.

Damage caused by the fire at the LNG facility will take until around October 2021 to repair.

The fire, in which no one was killed nor injured, suffered its main damage from large amounts of seawater from the extinguishing process downing auxiliary systems such as electrical equipment and cables.

Feed-gas for the single-Train Hammerfest liquefaction facility, which exports around 5 million tonnes per annum of LNG, comes from the Snohvit gas field in the Barents Sea.

The 25th licensing round comprises nine areas outside the APA area on the Norwegian shelf.

The round was announced on the 19th of November 2020 and includes one area in the Norwegian Sea and eight in the Barents Sea.

The companies that have applied for production licences are: Norske Shell; Equinor Energy; Idemitsu Petroleum Norge; Ineos E&P Norge ; Lundin Norway AS; OMV (Norge) and Var Energi AS.

Norway also allocates exploration areas on the Norwegian Continental Shelf and these take place annually through two equal licensing rounds.

These rounds include areas in the most famous exploration areas. As exploration activity has been going on for several decades, the most well-known exploration areas now include most of the North Sea and the Norwegian Sea and a large part of the Barents Sea to the south.

The Ministry in January 2021 awarded 61 upstream licences in pre-defined areas of the NCS to 30 licensees, including prominent LNG players such as BP, Shell, Total and Eni of Italy, as well as ConocoPhillips, the only bidder among US majors.

The body representing German pipeline operators has issued its network development plan for gas from 2020-2030 and is preparing for the arrival of LNG cargoes in addition to pipeline supplies from Russia and Norway.

“The additional measures compared to the previous gas network development plans are largely in place in connection with the supply of Baden-Württemberg, the connection of the LNG terminals and the necessary expansion measures for ‘green gases’ and security of supply in the Netherlands,” said the German Association of Transmission System Operators (FNB) in its report.

The Germans form Europe’s biggest natural gas market after the UK and the nation is an importer of more than 90 percent of its needs.

It receives Russian natural gas via Ukraine and Poland and from the Nord Stream 1 pipeline across the Baltic Sea for onward distribution to other EU countries in the region.

Germany will additionally be joining the LNG market by 2022 with volumes from North America and elsewhere with regasification and import terminals planned for on onshore Elbe River terminal at Brunsbuettel near Hamburg and a floating storage and regasification unit at the North Sea port of Wilhelmshaven.

“For the bottleneck analysis in the Germany-wide Trading Hub Europe market area, over 51,000 individual load cases per calculation year are used,” it added.

“In the considered scenarios with different characteristics of forecast market shifts there are significant variations in the different
sources of gas from Russia, Norway and LNG,” stated the FNB.

“The transmission system operators provided results for the Gas 2020–2030 network development plan, including information obtained through public consultation and thus meet the requirements of the Energy Industry Act and the Gas Network Access Ordinance,” explained the FNB.

In the scenario framework, there are two possible outcomes for the development of gas demand in Germany up to the year 2030.

These scenarios take into account the current European climate protection goals.

With a network extending approximately 40,000 kilometres in length, the German transmission system operators form the backbone of the entire gas transport system in Germany.

The distribution system for natural gas that is fed by the transmission system is more than 470,000km long.

The existing gas infrastructure can make a significant and economically valuable contribution in the energy system of the future.

Gas itself is a climate-friendly source of energy and can become completely climate-neutral. The gas infrastructure opens up the opportunity to transport very large quantities of renewable energy as well as to store it long term.

Through the integration of “green gases” in the existing infrastructure, it is noted that a significant contribution can be made swiftly and cost-efficiently to the reduction of CO2 emissions.

“The transmission system operators also have plans for a hydrogen network based on the market needs and fleshed out by 2030,” said the FNB.

“These plans are a first step towards a national one and prospective European hydrogen network,” it added.

It was noted that it would seem to make sense to put this infrastructure to work in the future to transport “green gas”, i.e. climate-neutral gas obtained from biogas or generated synthetically from renewable electricity in the form of hydrogen or methane.

LNG facilities should also be taken into consideration “in competition for planning purposes” so that the networks are not designed to be able to take over further capacity from LNG facilities in addition to any takeover of the network entry points.

Furthermore, LNG facilities are likely to be in competition with each other.

The design of the rival marketing will enable capacity that is not nominated or not booked in the short and medium term to be used at the rival points.

The proposed rival planning is intended to allow the LNG facilities to maintain freely allocable capacity.

“The overall comparatively low cost of using market-based instruments in the gas marketing year, from the perspective of the transmission system operators, do not offer sufficient justification for an alternative Network expansion,” said the FNB.

“In terms of a needs-based network expansion, an evaluation of possible structural measures should be carried out for the period after the gas business year 2025-2026 as an alternative to the use of market-based instruments,” it added.

Natural gas supplies about 24 percent of Germany’s energy needs today, a figure that rises to 45 percent for heating and gas beats electricity by more than a factor of four.

The gas network also has substantial storage capacity, as it has to cope with significant seasonality.

Average gas consumption in February is more than three times greater than in August.

To meet the spike in demand in winter, Germany has gas storage volume of around 260 terawatt hours, enough to cover peak demand for more than two months without additional supply sources.