Three visions for gas as the fuel set to compete with oil

Three visions for gas as the fuel set to compete with oil

The Middle East is emulating international oil companies and increasing the search for gas and its production Gas is in fashion in the Middle East. The region’s major national oil companies have announced ambitious plans to find, produce, transmute and export more. But for the fuel to complement and ultimately supplant oil, a roadmap is required for the evolution. Every one of the major Middle East producers’ gas reserves life at current production rates exceeds their oil reserves life. The UAE has 98 years of gas versus 68 years of oil; Iraq more than 120 years of gas compared to 90 years of oil. And as less attention has been paid historically to finding gas, they have the potential to boost reserves further. Adnoc announced last month an updated gas strategy, covering the development of sour gas (containing toxic hydrogen sulphide), producing unconventional gas for the first time, boosting gas use in petrochemicals, and aiming for national self-sufficiency. It also awarded a 10 per cent stake in its offshore sour gas fields to Germany’s Wintershall, which will partner Eni of Italy. Saudi Aramco plans to invest $150 billion over a decade to expand raw gas output from 14 billion cubic feet per day to 23 billion. It will also develop unconventional gas and is looking at investing in Russia’s Arctic-2 liquefied natural gas export project. Meanwhile, despite leaving Opec, the world’s largest LNG exporter, Qatar, has expanded plans to boost its current 78 million tonnes per year capacity to 110 million. Bahrain announced discoveries of gas deep beneath the island, as well as offshore unconventional oil and gas. Kuwait is developing deep, sour light oil and gas in the country’s north. And Oman, the regional pioneer of tight gas (from low-permeability reservoirs, requiring hydraulic fracturing), has set gas production records via BP’s Khazzan project, and Shell and Total plan a series of investments there, including using LNG to fuel ships. Even Iraq, long the regional laggard, is gradually boosting capture of flared gas, a by-product of oil production, to feed its underperforming power plants. The NOCs are pivoting in the direction of the big international firms such as Shell, Equinor and Total, which now produce as much or more gas than oil. With ever-growing concerns over climate change and predictions of “peak oil demand” in the 2020s or 2030s due to the rise of electric vehicles, gas seems a safer bet. Gas produces about 25 per cent less carbon dioxide per unit of energy when burned than oil and much lower other pollutants. Relatively cheap and abundant, a newly globalised business means it can quite readily be transported worldwide. It can generate electricity; fuel cars, lorries and ships either directly or by charging batteries; heat homes and drive industries; and be converted to petrochemicals. Gas demand growth is quite strong but faces headwinds, mainly from environmentalists. In many Asian countries, coal remains cheaper than gas, if its pollution is ignored. Chinese tariffs would make it difficult for US LNG to compete there. Renewable electricity generation is getting ever cheaper and competes increasingly with gas in windy and sunny areas. Such dynamics suggest two outcomes for future gas.

https://www.thenational.ae/business/energy/three-visions-for-gas-as-the-fuel-set-to-compete-with-oil-1.800708

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