October 2017, Vol. 244, No. 10

In The News

World News

Natural Gas to Become Primary Energy Source by 2035

Oil and gas will be crucial components of the world’s energy future, according to DNV GL’s forecast of the energy transition. While renewable energy will grow its share of the energy mix, oil and gas will account for 44% of world energy supply in 2050, compared to 53% today. Gas will become the largest single source of energy starting in 2034.

DNV GL’s Energy Transition Outlook (ETO), a forecast that spans the global energy mix to 2050, predicts that global demand for energy will flatten in 2030, then steadily decline over the next two decades, thanks to step-changes in energy efficiency. The fossil fuel share of the world’s primary energy mix will reduce from 81% currently to 52% in 2050.

Demand for oil will peak in 2022, driven by expectations for a surge in prominence of light electric vehicles, accounting for 50% of new car sales globally by 2035. However, the stage is set for gas to become the largest single source of energy toward 2050, and the last of the fossil fuels to experience peak demand, which DNV GL expects will occur in 2035.

Gas will continue to play a key role alongside renewables in helping to meet future, lower-carbon, energy requirements. Major oil companies intend to increase the share of gas in their reserves, and DNV GL expects an accelerated shift by 2022 as they decarbonize business portfolios.

Argentina Gains Financing To Expand Gas Pipelines

Argentina has secured $150 million in financing from CAF, a multilateral development bank in Latin America, to expand its natural gas transport capacity and connect more homes to the country’s gas grid in hopes of reducing consumption of more expensive alternatives, such as liquid petroleum gas.

With the financing, Argentina will proceed with expanding the backbone pipelines in the north and south of the country and increasing the delivery potential of a line that brings in supplies from Bolivia. In May, the government called a tender for projects to expand three pipelines, with spending estimated at $168 million.

Argentina needs more pipeline capacity as production recovers from a 10-year low of 4 MMcf/d in 2014, and a series of new projects to develop Vaca Muerta, the country’s biggest shale play, brings greater amounts of gas supplies to market. Government officials said gas production, which meets 50% of national energy needs, should reach 6.5 MMcf/d in 2025.

Energy Industry Looks for Natural Gas to Save it From Oil and Coal Decline

The global energy industry is betting that the clean characteristics of gas compared with oil and coal will allow it to keep growing as other fossil fuels decline. Of the 16 new BP projects due on stream between this year and 2021, 12 involve gas rather than oil. Similar shifts are under way across the industry, according to a report in the Financial Times last month.

Natural gas outweighs oil by a factor of 2-to-1 among pre-development resources awaiting investment decisions, said Wood Mackenzie, the energy consultancy. “In the past, when you struck gas rather than oil in this industry you were disappointed, but now we go looking for it,” said Claudio Descalzi, CEO of Eni, the Italian group working to bring the huge Zohr gas field off the coast of Egypt on stream.

“Renewables will dominate in the long run but during the transition, and maybe even at the end of it, there will need to be a stable source of electricity that can step in when wind and solar are not available,” said Maarten Wetselaar, head of gas at Shell.

$700 Million Nigerian Gas Pipeline Suffers Setback

An opportunity for Nigerians to increase electricity supply was setback after contractors handling the 123-km East-West Obiafo/Obirikom to Oben (OB3) gas pipeline failed to meet the project completion deadline. The pipeline was initiated to transport gas from the eastern Niger Delta to the west Niger Delta where demand exists because of the high number of power plants and industrial gas consumers.

The project, which is part of a network of gas pipelines under construction around the country, is expected to boost the startup of hundreds of new businesses and reduce the cost of doing business in the country by as much as 30%. Power plants would have seamless gas supply and generate a significant mark-up in electricity, as it would be linked to the Escravos-Lagos pipeline.

The project is estimated to cost $700 million when completed. The East-West gas pipeline is about 123 km x 48 inches and is supposed to add 1 Bcf/d to domestic gas system. It was awarded to two indigenous oil servicing companies, Nestoil and Oilserv Limited in 2012 with July 31, 2017 as the deadline for the completion of the project.

ConocoPhillips to Dismantle Historic Norwegian Oil Platform

ConocoPhillips has government permission to prepare for the removal of the first permanent oil platform built off Norway over 40 years ago, Reuters reported. The company will remove Ekofisk 2/4 A, which  began producing oil from the North Sea in 1974 and shut permanently in 2013.  Production at the Ekofisk field began in 1971 from the Gulftide jack-up rig, a temporary installation standing on removable legs. Gulftide was replaced with production platforms permanently fixed to the seabed in 1974.

Discovered in 1969, Ekofisk was the first oilfield to begin production off Norway. While the field’s oldest installations are being removed, new equipment was put in place and production is ongoing, with the field expected to continue pumping oil towards 2050.

The removal plans also include two accommodation platforms, Ekofisk 2/4 H and Ekofisk 2/4 Q, and a riser platform called Ekofisk 2/4 FTP. Dutch company Heerema was awarded the removal contract. All four platforms will eventually be taken to AF Decom yard at Vats on Norway’s western coast for dismantling and steel recycling.

Operator ConocoPhillips has a 35% stake in Ekofisk, France’s Total has almost 40%, Italy’s Eni has 12.4%, Norway’s Statoil has 8% and Norwegian state-owned Petoro has 5%.