Gastech: LNG development driving changes in gas markets

Angel White
HOUSTON, Dec. 15 -- Driven by the rapid development of LNG, gas markets are being transformed from regional into global markets and have been undergoing other major changes, said Total SA Executive Vice-Pres. Yves-Louis Darricarrere at the 2006 Gastech Conference in Abu Dhabi.

"As long as LNG flows were concentrated east of the Suez Canal and based on inflexible, very long-term contracts, they basically reflected the same relationship of mutual interdependence as when producers and consumers were linked by a gas pipeline. It's just that a different technological solution was used."

He said globalization of gas markets will soon result from the development of consumption in the Atlantic markets combined with the growing liquidity of spot markets such as Henry Hub in the US and the UK's National Balancing Point.

Global gas consumption is expected to continue to grow by 2-3%/year through 2020. Fueled by this demand along with expensive and limited pipe solutions and the gradual depletion of gas fields near main consumer regions—which is pushing supply further and further away from markets—LNG is taking a larger share of the traded gas market. It is growing by 8%/year to represent 40% of traded gas in 2020 and 15% of consumption, Darricarrere said.

"In this context, the Middle East, which sits on one third of the world's natural gas reserves and is located halfway between the two major consumer regions—the United States and Asia—is on the way to becoming the world's leading source of LNG, with a unique position of arbitrating the markets," he said.

"The Middle East is where we can observe how the gas industry is changing, not only because of the strategic location of its gas resources, but also [because of the] favorable conditions for the implementation of a variety of new gas technologies."

Gas projects
Darricarrere said megaprojects worldwide, but particularly in Qatar, are becoming "bolder and more daring. LNG projects are not only innovative by their size but by their design and commercial arrangements," he said.

In addition, there is a sharp increase in the number of gas receiving terminals in the main markets, particularly the US and Europe; construction of new long-reach pipelines, such as the 380-km Dolphin pipeline that extends from Qatar to the UAE; and with the development of sour gas and of gas fields in harsh environments, such as that off Sakhalin Island.

For all the projects to be launched and meet success, major capital programs will have to be carried out in both producer countries and consumer regions.

According to International Energy Agency estimates, Darricarrere said, capital investments for gas projects over the next 25 years are placed at $3.9 trillion ($156 billion/year), with the largest investment, $2.2 trillion, being in exploration and production followed by $1.3 trillion for pipes, $100 billion for storage, and $300 billion for LNG.

However, he said, there are numerous smaller innovations such as the systematic use of associated gas in the new projects or the multiflow transport of hydrocarbons, which together are very important to bringing more gas resources to the markets in a sustainable and responsible way.

He said it is evident that "[companies will] have to cost-effectively develop gas resources that are located farther and farther from the markets and that are smaller and smaller and more and more difficult to produce."

But just as with many technical challenges, these challenges also will surely be met, Darricarrere said.

Managing growth
Technology and human resources will drive continued innovation in the gas industry, Darricarrere said.

Technology already allows us to reach resources that were previously considered "stranded." Nevertheless, "a sustained effort is required to reach even more difficult developments and transform more stranded gas into commercial fields," he said. "Growth in the gas market, which is very solid, … cannot be met without deploying more technology in a world where the easiest resources have already been tapped.

"Arctic gas fields, tight gas, very sour gas, small and remote resources will all benefit from new technologies, and, in common with large gas developments, they all have to address the need to improve the energy efficiency of our plants, particularly in LNG, not to mention GTL [gas-to-liquids]," he added.

Along with the need for technology, the gas industry requires more human resources due to the increasing complexity of gas projects—finding markets, setting commercial terms, managing onshore plants in harmony with host communities and sometimes across borders.

"Sourcing more people locally is critical," for a number of reasons, Darricarrere said. Local know-how is a major advantage in designing projects that benefit all stakeholders. They help in developing markets, in maintaining relations with customers, in supporting local communities in their sustainable development, and in operating and maintaining a plant over 20 years or more. Secondly, maximizing the involvement of the people to whom the projects matter simply makes good business sense.

"Companies that can put forward dedicated technological capabilities and the right people to guide stakeholders through the right decision process then implement the project on time and on budget will not only maximize the benefits for host communities and countries but also help to meet the gas challenges," he concluded.

Related Articles

WAFWA: Aerial survey finds lesser prairie chicken population grew

07/06/2015 A recent range-wide aerial survey found the lesser prairie chicken population rose 25% from 2014 to 2015, the Western Association of Fish & Wil...

Buru awarded onshore Canning licenses

07/06/2015 Buru Energy Ltd., Perth, and Mitsubish Corp. have been granted two production licenses for Ungani oil field in the onshore Canning basin of Western...

Cenovus sells royalty business for $3.3 billion

07/06/2015 Cenovus Energy Inc., Calgary, inked an agreement to sell its wholly owned subsidiary Heritage Royalty LP to Ontario Teachers’ Pension Plan for gros...

CERI: Energy, operational efficiencies possible in Canadian oil, gas

07/06/2015 Measures can be taken by operators in the expanding resource-intensive Canadian oil and gas sector to improve both energy efficiency and operationa...

AGL Energy to scale back upstream gas operations

07/06/2015

Gas retailer AGL Energy Ltd., Sydney, says it will exit the oil business and massively scaling back its upstream gas operations.

Woodside lets contracts for Browse LNG project

07/06/2015 Woodside Petroleum Ltd. has let more contracts for the Browse floating LNG project offshore Western Australia. The contracts, awarded to a Technip-...

Macondo settlement seen ‘positive’ for BP

07/06/2015 BP Exploration & Production Inc.’s recent agreement to settle federal and state claims related to the 2010 Macondo blowout and spill improves t...

Emerging producers offered guidelines for governance

07/06/2015 Like most worthy endeavors, governing oil and gas activity at the national level is easier said than done-especially where oil and gas never before...

Nelson-Farrar Quarterly Costimating Indexes for selected equipment items

07/06/2015 The Nelson-Farrar refinery construction index rose to 2,475.6 by December 2012 from 2,467.4 in January of the same year. The index continued to ris...
White Papers

2015 Global Engineering Information Management Solutions Competitive Strategy Innovation and Leadership Award

The Frost & Sullivan Best Practices Awards recognise companies in a variety of regional and global...
Sponsored by

Three Tips to Improve Safety in the Oil Field

Working oil fields will always be tough work with inherent risks. There’s no getting around that. Ther...
Sponsored by

Pipeline Integrity: Best Practices to Prevent, Detect, and Mitigate Commodity Releases

Commodity releases can have catastrophic consequences, so ensuring pipeline integrity is crucial for p...
Sponsored by

AVEVA’s Digital Asset Approach - Defining a new era of collaboration in capital projects and asset operations

There is constant, intensive change in the capital projects and asset life cycle management. New chall...
Sponsored by

Transforming the Oil and Gas Industry with EPPM

With budgets in the billions, timelines spanning years, and life cycles extending over decades, oil an...
Sponsored by

Asset Decommissioning in Oil & Gas: Transforming Business

Asset intensive organizations like Oil and Gas have their own industry specific challenges when it com...
Sponsored by

Squeezing the Green: How to Cut Petroleum Downstream Costs and Optimize Processing Efficiencies with Enterprise Project Portfolio Management Solutions

As the downstream petroleum industry grapples with change in every sector and at every level, includin...
Sponsored by

7 Steps to Improve Oil & Gas Asset Decommissioning

Global competition and volatile markets are creating a challenging business climate for project based ...
Sponsored by
Available Webcasts

On Demand

OGJ's Midyear Forecast 2015

Fri, Jul 10, 2015

This webcast is to be presented by OGJ Editor Bob Tippee and Senior Economic Editor Conglin Xu.  They will summarize the Midyear Forecast projections in key categories, note important changes from January’s forecasts, and examine reasons for the adjustments.

register:WEBCAST


Predictive Analytics in your digital oilfield - Optimize Production Yield and Reduce Operational Costs

Tue, Jul 7, 2015

Putting predictive analytics to work in your oilfield can help you anticipate failures, plan and schedule work in advance, eliminate emergency work and catastrophic failures, and at the same time you can optimize working capital and improve resource utilization.  When you apply analytic capabilities to critical production assets it is possible to reduce non-productive time and increase your yield.

Learn how IBM's analytics capabilities can be applied to critical production assets with the goal of reducing non-productive time, increasing yield and reducing operations costs.

register:WEBCAST


Cognitive Solutions for Upstream Oil and Gas

Fri, Jun 12, 2015

The oil & gas sector is under pressure on all sides. Reserves are limited and it’s becoming increasingly expensive to find and extract new resources. Margins are already being squeezed in an industry where one wrong decision can cost millions. Analyzing data used in energy exploration can save millions of dollars as we develop ways to predict where and how to extract the world’s massive energy reserves.

This session with IBM Subject Matter Experts will discuss how IBM Cognitive Solutions contribute to the oil and gas industry using predictive analytics and cognitive computing, as well as real time streaming for exploration and drilling.

register:WEBCAST


The Alternative Fuel Movement: Four Need-to-Know Excise Tax Complexities

Thu, Jun 4, 2015

Discussion on how to approach, and ultimately embrace, the alternative fuel market by pulling back the veil on excise tax complexities. Taxes may be an aggravating part of daily operations, but their accuracy is crucial in your path towards business success.

register:WEBCAST


Emerson Micro Motion Videos

Careers at TOTAL

Careers at TOTAL - Videos

More than 600 job openings are now online, watch videos and learn more!

 

Click Here to Watch

Other Oil & Gas Industry Jobs

Search More Job Listings >>
Stay Connected