ONS 2008: Supplying the Future

12 August 2008 (Last Updated August 12th, 2008 18:30)

Thanks to rapidly rising oil prices, the role of gas companies in meeting future energy needs has never been more important. With global producers investing more money and technology in gas exploration and production, Offshore Technology’s Ozge Ibrahim tracked down Total for an exclusive insight into the unique contribution LNG is making and its role in regulating, and determining, world gas prices and supplies.

ONS 2008: Supplying the Future

Every corner of the offshore and power industry has been affected by new demands to meet the increase in energy demand while being more environmentally friendly.

An important debate on how this could be achieved was reignited recently with oil and gas executives calling for a dedicated organisation to gas exploration and production similar to OPEC. The idea of creating a "gas OPEC" – originally put forward by Iran a few years ago – has unsurprisingly caused controversy.

However, despite no longer being favoured by Iran (which believes such a cartel could set prices with gas quotas) other countries believe that an organisation of top gas producers could create a valuable forum for information sharing, including ideas on new technologies.

While industry leaders debate the pros and cons, their strong opinions reflect the growing importance of gas in supplying global energy seen by the steady expansion of LNG production both in Europe and internationally.

The global LNG scene

Jean Marc Hosanski, vice-president of LNG at one of the world’s largest oil and gas companies, Total, will head a forum on the subject at ONS 08. This year’s event is to be held in one of the top LNG-producing regions, Norway.

“We expect LNG to grow at a rather impressive 9% a year from 2007 to 2015.”

"LNG share in the global gas balance is increasing rapidly: we expect LNG to grow at a rather impressive 9% a year from 2007 to 2015, more than four times the average growth of expected gas consumption during the same period," Hosanski says.

Hosanski believes that as a result, LNG will represent about 15% of the world’s gas consumption by 2015. Total participates in nine liquefaction plants that are producing or in construction, and five regasification terminals.

The company also estimates that LNG will contribute about 20% of the incremental hydrocarbons consumption from 2007 through to 2015, while Norwegian gas company Gassco estimates that global LNG production will rise by about 400% by 2030.

The effect of more LNG in the market is also expected to affect global gas market structures, which Hosanski says will create links between previously disconnected markets.

"Because of LNG, what happens today in Europe or the US also impacts gas prices in Japan or China," Hosanski says.

LNG technology for tomorrow

New and innovative technology will be necessary to push forward tomorrow’s LNG market. The technologies at the forefront of future LNG projects for Total include gas production and processing in arctic conditions, deep offshore operations and technologies that reduce emissions, such as carbon capture and sequestration.

Many of the large fields that have been or are likely to be discovered over the next few years are located so far from the consuming markets that pipeline transport is impossible, from both a logistical and a commercial perspective. As a result, shipping natural gas by sea presents the only solution.

As the LNG shipping sector grows, with more players, ships and even more flexible transport contracts, this part of the industry will be crucial to ensuring LNG supplies reach their markets.

According to Hosanski, while the LNG shipping industry can keep up with this demand, skills shortages that plague the entire upstream industry remain a concern

"The main challenge in this respect is not the construction or financing capacity but the human resources issues: training the crews necessary for managing the increased fleet of LNG tankers with the same level of safety and reliability that the industry has experienced in the past is a must, but is a difficult task."

With markets such as China and India expanding rapidly, a ready supply of skilled workers will be necessary to fill jobs and ensure that demand is met across the industry.

The number of importing countries is also expected to increase significantly in the coming years as markets in Mexico and the US continue to expand. Currently Northeast Asia and Western Europe dominate trade in LNG, with Japan still representing almost 50% of the LNG consumption worldwide, says Hosanski.

"In summary, we could say that the LNG markets of tomorrow are everywhere and that the LNG business is about to become a truly global business. The key question remaining is: will supply keep up with the increased demand?"

The ONS 08 event will seek to address this key question. At the LNG conference, chaired by Brit K S Rugland of Gassco on Thursday 28 August, Jean Marc Hosanski will address delegates on the global LNG scene. Meeting world energy demand is the theme of year’s ONS conference and exhibition in Norway, which is entitled "Energy for one World". The country, which sits at the heart of Europe’s gas exploration industry, will host the ONS conference, exhibition and festival.

According to May-Lis Thorsson, conference manager speaking on behalf of the conference committee, the theme for the conference was chosen to represent the present concerns of meeting energy requirements around the world. "We decided to use Energy for One World because we wanted to symbolise the global nature of the energy challenge," she says.

"Energy is necessary to meet our present global challenges, such as poverty and climate change, and is also produced, transported and consumed around the globe. And this is – to a large extent – done by global companies."