LNG

Norway, the nation that helped restore Europe’s energy security with natural gas, oil and LNG supplies after Russian links were cut following the invasion of Ukraine two years ago, has become the first country in the world to approve commercial deep-sea mining in its waters to supply rare minerals needed to make electric vehicles and other technology.

The Norwegian Parliament voted 80-20 on January 9 to approve a cross-party proposal that could revolutionise the global supply of minerals, which are pivotal for an array of clean technologies, including batteries for electric vehicles.

Under the new legislation Norway is opening up 280,000 square kilometres (108,000 square miles) of the Norwegian Continental Shelf, an area equivalent to the size of the UK, for the granting of exploration licences for minerals and chemical elements such as lithium, cobalt and scandium.

Norway’s approval of deep-sea mining in its own waters will add momentum to moves to open up some international waters for extracting rare minerals.

Mineral sources

Lithium and cobalt are only found below ground in a small number of countries, including onshore the Republic of Congo in West Africa, which will also soon become an LNG exporter with an offshore natural gas project being developed by Italian major Eni.

Norway itself has impeccable environmental and conservation profile as a nation and easily stepped in to increase its natural gas supplies to Europe when Russian deliveries were cut after the invasion of Ukraine in February 2022.

The Norwegians are also Europe’s largest producers of hydro-electric power and more than 95 percent of their electricity and 50 percent of all the country’s power comes from renewables, including wind.

The Norwegians also run the Hammerfest LNG export plant on Melkoya Island in northern Norway supplying nations such as France, the Netherlands, Italy, the UK, Spain and Lithuania with cargoes.

Failure of ideas

The Norwegian move on deep-sea mining was, of course, condemned by the environmental groups, run by the elites and who have forced governments to get petrol-driven cars off the road and replace them with electric vehicles without themselves coming up with any worthwhile suggestions except for sowing chaos and energy poverty.

Analysts say that estimates for the rare minerals industry’s new potential range from hundreds of millions to trillions of dollars.

They add that pressure from opponents mean detailed environmental studies will have to be carried out before any mining can take place, potentially delaying extraction until the 2030s.

None of Norway’s 17 protected marine areas are included in the Norwegian zones proposed for mining and the Government in Oslo has insisted that every commercial licence will have to be approved by its parliament, the Storting.

The first steps for commercial mining companies will be to undertake exploration and mapping activities to increase knowledge of what is below ground in the NCS.

European natural gas and LNG prices skyrocketed by 47 percent on the week to their highest level since mid-February as geopolitical and energy security tensions gripped the Atlantic Basin and Mediterranean markets while North Asian spot cargo prices rose by just over 5 percent.

Former German Chancellor Angela Merkel has defended her natural gas and energy ties to Russia during her 16-year tenure, including the building of the Nord Stream II gas pipeline from Russia under the Baltic Sea to Germany where LNG will soon replace Gazprom supplies.

Equinor, the leading European pipeline natural gas and LNG supplier from the Norwegian Continental Shelf, has submitted a plan of development for a gas field to boost supplies to the UK and the European Union.

Equinor said its plan had gone to the Norwegian Minister for Petroleum and Energy for the Irpa gas discovery, formerly known as the Asterix field.

The Irpa gas field is in the Vøring Basin in the Norwegian Sea, located about 80 kilometres west of the world’s largest spar platform, the Aasta Hansteen platform, and 340km west of Bodø in Norway’s Nordland county just north of the Arctic Circle.

Equinor, which owns 51 percent of the field, explained that the discovery was proven way back in 2009 and contains 19.3 billion standard cubic metres of natural gas

The company’s partners in the venture include the Norwegian state firm Petoro, Shell plc and Germany’s Wintershall DEA.

“The Irpa discovery will be developed with three wells and an 80-km long tie-back pipeline to Aasta Hansteen in water depths of 1,350 metres,” explained Equinor.

Cost

The Norwegian company and the other shareholders intend to spend 14.8 billion Norwegian crowns ($1.44Bln) to bring the field on stream in the fourth quarter of 2026.

Equinor said that there would be joint production from Irpa and Aasta Hansteen through 2031 and then the Irpa field would continue to produce until 2039.

“This is a good day and the development of Irpa will contribute to predictable and long-term deliveries of gas to customers in the European Union and the UK,” declared  Geir Tungesvik, Equinor’s executive vice president for Projects, Drilling and Procurement.

The company explained that the gas will be phased into existing infrastructure over Aasta Hansteen and transported to the Nyhamna gas processing plant via Polarled.

From there, gas will be transported via the Langeled pipeline system to customers in the UK and continental Europe.

“The development shows that near-field exploration and utilisation of existing infrastructure provides good resource utilisation on the NCS,” said Grete Birgitte Haaland, senior vice president for Exploration and Production North at Equinor.

“Irpa will maintain existing jobs at Aasta Hansteen, at the supply base in Sandnessjøen, at the helicopter base in Brønnøysund and at the operations centre in Harstad,” she stated.

TotalEnergies has approved the final investment decision for the Fénix gas development offshore LNG importer Argentina in partnership with Germany’s main oil and gas company Wintershall Dea.

Germany’s Federal Networks Agency, the Bundesnetzagentur, has revealed that the nation could face a major natural gas test from July 11 when Russian natural gas supplier Gazprom has scheduled maintenance for the Nord Stream 1 pipeline under the Baltic Sea from Russia to northern Germany.

UK major BP has issued the 70th edition of its Statistical Review of World Energy, highlighting global energy trends including LNG, the pipeline natural gas sector, oil and renewables and their recovery path from the Covid-19 pandemic and the oil price crash.

Inter-regional gas trade dropped by 5.3 percent, completely accounted for by a 54 Bcm, or 10.9 percent, fall in pipeline trade.

“LNG supply grew by 4 Bcm, or 0.6 percent, well below the 10-year average rate of 6.8 percent,” said the BP report.

US LNG supply expanded by 14 Bcm, or 29 percent, though this was partially offset by declines in most other regions, notably Europe and Africa.

“European gas imports fell by over 8.5 percent last year. The gas-on-gas competition in Europe takes the form of pipeline imports, predominantly from Russia, competing against LNG imports largely from the US as the marginal source of LNG,” said the 72-page Review from BP.

“As LNG imports have increased in recent years it has raised the question of the extent to which Russia and other pipeline gas exporters will compete against LNG to maintain their market share or instead forgo some of that share to avoid driving prices too low,” the UK major's report explained.

On the pricing front, BP noted that natural gas prices declined to multi-year lows with the US Henry Hub averaging $1.99 per million British thermal units, the lowest since 1995.

Asian LNG prices also tumbled in the form of the Japan Korea Marker, which registered its lowest annual average of $4.39 per MMBtu since it was launched in 2009 by US pricing agency Platts.

BP’s report showed that natural gas consumption fell by 81 Bcm, or 2.3 percent.

“Nevertheless, the share of gas in primary energy continued to rise, reaching a record high of 24.7 percent,” said BP.

Declines in gas demand were led by Russia, down 33 Bcm, and US demand fell 17 bcm.

The largest increases in natural gas demand were logged by China at 22 Bcm and by Iran with 10 Bcm of additional needs.

Oil market

In the oil market, linked to long-term LNG cargo prices and the economics of development projects, the North Sea Brent crude price averaged $41.84 per barrel in 2020, the lowest since 2004.

Refinery utilization also fell by a record 8.0 percentage points to 74.1 percent, the lowest level since 1985.

BP reported that oil consumption fell by a record 9.1 million barrels per day, or 9.3 percent, to its lowest level since 2011.

Oil demand fell most in the US, down 2.3 million b/d, the European Union, down by 1.5 million b/d and India where the market declined by 480,000 b/d.

China was virtually the only country where consumption increased with a jump of 220,000 b/d.

Global oil production shrank by 6.6 million b/d, with the Organization of Petroleum Exporting Countries accounting for two-thirds of the decline. The largest OPEC declines came from Libya, down 920,000 b/d and Saudi Arabia, down 790,000 b/d.

The biggest non-OPEC falls were in Russia where output declined by 1.0 million b/d and the US, down 600,000 b/d.

Overall global energy demand is estimated to have fallen by 4.5 percent in 2020.

The drop in oil consumption accounted for around three-quarters of the total decline in energy demand.

Natural gas showed greater resilience, helped primarily by continuing strong growth in China.

Despite the market disorders of 2020, renewable energy, led by wind and solar energy, continued to grow, increasing last year by 238 gigawatts.

Gassco, the Norwegian natural gas pipeline operator and one of the main competitors to LNG, transported 106.99 billion cubic metres of gas through the pipeline systems from Norway to Europe and the UK in 2019, less than in the previous year.

Gassco, the Norwegian natural gas pipeline operator and one of the main competitors to LNG, transported 114.2 billion cubic metres of gas during 2018 from the Norwegian Continental Shelf to mainland Europe and the UK.

Norwegian gas network company Gassco said natural gas has now begun flowing through the Polarled pipeline, opening up a completely new province of pipeline gas supply to Europe from Norway in competition to LNG.