Energy Transition Topics: May 2022
Ammonia— A new joint venture was announced by Japanese trading company, Mitsui Co., and American commodities producer CF Industries. The terms of the JV are that Mitsui Co. will be responsible for selling blue ammonia to buyers throughout Asia. In other words, CF Industries produces the cleaner ammonia at large scale, and then Mitsui Co. sells it to Asia markets. One report says that Asia imports around 3 million tons of ammonia, but with this cleaner fuel those figures could go way up. As one of the most important Energy Transition fuels, blue ammonia is particularly important in Asia-Pacific markets due to widespread usage in manufacturing facilities and for ships throughout the region.
Carbon Capture and Storage (CCS) — There were so many announcements this month that it is only necessary to compile a couple of the most important news from countries that have been trending the most on the topic of CCS.
Australia’s Santos announced at the Australian Petroleum Production and Exploration Association on 18 May 2022 that despite the constant criticisms of CCS that the technology is still critical for the Energy Transition, which means that Australia’s LNG industry should view CCS as a way to de-carbonize and reach Net Zero carbon emissions. Santos Ltd CEO Kevin Gallagher went a step further by encouraging South Korea to invest in Australia’s CCS capabilities. Australia has the world’s largest CCS project, operated by Chevron, at the Gorgon LNG project located in Western Australia, while South Korea is a major energy importer and one of the countries leading on the “energy security” efforts in Asia-Pacific amidst the Russia-Ukraine conflict.
In the United States the Biden Administration announced via the Department of Energy a $3.5 billion funding program for the Bipartisan Infrastructure Law that allocates funds for CCS technology development, including four Regional Direct Air Capture Hubs in the USA. It was reported that these funds will last from the years 2022–2026 with each hub capable of storing one million metric tons of carbon per year.
On 23 May 2022, France’s TotalEnergies signed an agreement with Sempra Infrastructure, Mitsui Co., and Mitsubishi Corporation to develop on the Hackberry Carbon Sequestration (HCS) project at the Cameron LNG facility located in Louisiana. According to the official agreement this project is expected to be North America’s first CCS facility that is designed to receive and store CO2 from multiple areas of production. Sempra’s CEO Justin Bird noted that a joint venture is a possible part of the deal, while the senior vice president of LNG at Total Energies said low-carbon LNG is key to Europe’s energy diversification strategy.
Singapore’s Eastern Pacific Shipping unveiled its two tankers — M/T Pacific Cobalt and M/T Pacific Gold — which are poised to receive the first carbon capture and filtering systems. This is very exciting news for the shipping industry and marine fuels decarbonization targets, according to the International Maritime Organization (IMO).
Perhaps this all seems a little too positive, so take a look at what happened in Canada this month where the Alberta government was criticized for the way it was controlling the underground space and awarding CCS projects.
Moreover, Saudi Aramco CEO Amin Nasser publicly announced at the World Economic Forum in Davos that underinvestments in hydrocarbons are a symptom of the “flawed transition strategy” that has been underpinned by Covid-19 supply chain effects and the Russia-Ukraine conflict.
Finally, American offshore energy company Talos Energy announced on 25 May 2022 the company’s intentions to expand on CCS facilities in the US Gulf of Mexico by continuing to push for merger and acquisition (M&A) opportunities in USA, Brazil and West Africa.
Natural Gas Pipelines — Canada’s Enbridge Inc announced on 26 May 2022 a pipeline project to supply USA’s Venture Global LNG with natural gas at the Plaquemines liquified natural gas (LNG) export facility in Louisiana after Venture Global made the final investment decision (FID). It was reported that the first phase of the pipeline project is going to produce appoximately 13.3 million tonne per annum (MPTA) of LNG.
Upstream has been writing about energy companies that are exploring Africa’s potential for LNG pipeline infrastructure as an alternative to Russia and Persian Gulf producers. For instance, Siva Prasad of Rystad Energy said “Asian and European importers will need to consider African priorities as they develop projects, as many African producers are focusing on supplying energy locally as well as to intra-African markets, along with catering to global markets.” Prime examples include a a proposed natural gas pipeline from Tanzania to Zambia.
