The panel addressed the role of gas in the energy transition. (Image source: AIEN International Energy Summit)

A panel session at the AIEN International Energy Summit in Bangkok, Thailand, focused on the role of gas in the energy transition, looking at how natural gas, particularly LNG, impacts the security, affordability and sustainability of a robust energy future

Moderator Edward Taylor, partner, A&O Shearman asked the question, is natural gas still relevant to the energy evolution?

Andrew Kirk, vice president Origination, LNG, B Grimm said it will continue to play a big role. “The issue with renewables capacity and their intermittent nature means we will continue to need natural gas. New technologies such as batteries are still a long way off from being able to supply a full grid load. Renewables are also geographically bespoke and not available to all. They can provide solutions in areas with limited demand but the cost to run a city like Bangkok is so problematic. Many countries will not be able to cope with the cost increase of moving straight to renewables.”

Steve Morrell, senior vice president, ExxonMobil PNG LNG, agreed. “The conversation about gas has never been more pertinent. Whether we are talking about emissions, the war in Ukraine, or living standards around the world – gas has its part to play. There are also so many conversations about the rise of Artificial Intelligence. But where is the power coming from to feed these data centres that will play such a large part?"

Accelerating the energy transition

“Gas can accelerate the energy transition today. We can stop coal today. We can fill the gaps in intermittent renewables today. So, what is holding us back?”

“We are far enough along the energy transition to separate the aspirational and the unachievable,” said Kirk. “We are hearing these ideological positions where gas is considered unnecessary without having a sensible conversation about alternatives. Moving straight to renewables will create very unstable energy grids that will stifle economic growth.”

With the global population set to grow by 2bn by 2050, Morrell believes the responsibility will grow even higher on the energy companies to provide affordable, reliable and sustainable energy, and natural gas will play a large role in this.

“Gas is well understood and relatively cleaner compared with coal. The infrastructure is there and expanding. There is a lot to be said for the marriage between gas and intermittent renewables. Moving from a well-known system to new technology – it isn’t going to happen overnight. We could put more gas into the system. This will help see a 60% reduction in emissions if we replace coal, without even using new technologies.”

“One of the main problems is how to fill the gaps from renewables,” Kirk concluded. “The answer is gas. The stage is set for a reasoned conversation about gas.”

High impact exploration drilling declined in 2023, but there are still significant reserves of hydrocarbons to be discovered. (Image source: Adobe Stock)

The State of Exploration 2024 report from Westwood Global Energy Group reveals that high impact exploration drilling in 2023 declined by 21%, due to energy transition strategies, industry consolidation, rising well costs and reduced activity in former hotspots

The commercial success rate is down seven percentage points on the previous year, with fewer giant discoveries resulting in a year on year decline in the average discovery size, and overall drilling finding costs increasing by a factor of six since 2019 to US$1.2/boe.

The findings also highlight a decrease in the number of companies participating in high impact drilling (down from 99 in 2019 to 68 in 2023), with supermajors and NOCs continuing to account for the majority of high impact well equity and leading in terms of both discovered resource and commercial success rate.

However, there are still significant volumes of hydrocarbons to be discovered, and cycle times are reducing.

Graeme Bagley, head of Global Exploration and Appraisal at Westwood said, " High oil prices previously led to high levels of exploration drilling. The appetite for exploration is still there but energy transition strategies are having a significant impact on the way the companies choose to replenish their reserves base, with industry consolidation and new technologies also having a part to play.”

The compressor trains will be used in the Hassi R'Mel gas field in Algeria. (Image source: Adobe Stock)

Baker Hughes has been awarded a major contract from Algeria’s SONATRACH to supply 20 compression trains for three gas boosting stations within the Hassi R’Mel gas field in Algeria

The contract is part of an order awarded to a consortium between Baker Hughes and Tecnimont.

Located 550 km south of Algiers, Hassi R’ Mel is the largest gas field in Algeria and one of the largest in the world, representing a key source of energy supply for Algeria and Europe. The compressor trains, based on Frame 5 gas turbine and BCL compressor technology, are expected to play an important role in the project by boosting and stabilising the pressure of natural gas and increasing production at site, which will enhance Algeria’s domestic energy system and economy as well as Europe’s energy security.

Major gas supplier

The new gas-boosting stations are part of Algeria’s ambitious plan to strengthen its role in the global energy market and its commitment to natural gas as a key energy source for socio-economic development. In 2022, Algeria led Africa in natural gas production, reaching a record 132.7 billion cubic meters. According to Bloomberg NEF, Algeria became the second-largest gas supplier to Europe in 2023, further strengthening the country’s role in enhancing the energy security of the continent, particularly in Italy where Algeria represents the biggest single source of import.

The compressors will be manufactured at Baker Hughes’ facilities in Italy.

“Today’s announcement marks a notable milestone in our historical collaboration with SONATRACH for key energy projects in Algeria that have played a crucial role in supplying reliable energy to Europe,” said Lorenzo

Simonelli, chairman and CEO of Baker Hughes. “We have long believed that it is critical to increase gas within the overall global energy mix to help achieve a lower-carbon economy. This project helps to solve for energy producers’ multi-faceted challenge of driving sustainable energy development as energy demand increases. We are proud to support such a critical energy project in partnership with Tecnimont.”

The concession's advanced sustainability scopes are one of the prime reasons that locked the deal for ADNOC. (Image source: Adobe Stock)

In its first strategic investment in Mozambique, ADNOC has acquired 10% of Galp’s interest in the Area 4 concession of the Rovuma basin in Mozambique

The acquisition will allow ADNOC a share of the liquefied natural gas (LNG) produced from the concession.

With the operational Coral South Floating LNG (FLNG) facility, the planned Coral North FLNG development and the planned Rovuma LNG onshore facilities, the concession has a combined production capacity of more than 25 mn tonnes per annum. It is one of the world’s largest gas discoveries in 15 years. 

A one-of-a-kind facility in Africa, the Coral South development is currently in operation, with a production capacity of up to 3.5 mtpa of LNG. Once up and running, the Coral North development is capable of adding another 3.5 mtpa of LNG to that. It will have a FLNG facility to process and liquefy natural gas for export. 

The modular, electric-drive design of the 18-mtpa Rovuma Onshore LNG development is capable of challenging industry standards when it comes to carbon intensity reduction from LNG production. 

The concession's advance sustainability scopes are one of the prime reasons that locked the deal for ADNOC, which aims to achieve a just transition-driven net zero by 2045. 

Integrated global gas business 

Musabbeh Al Kaabi, ADNOC executive director for low carbon solutions and international growth, said, “For over fifty years, ADNOC has been a reliable and responsible global provider of LNG and we are building on this role with this landmark investment in the world-class Rovuma supergiant gas basin in Mozambique as we deliver on our international growth strategy.

"Natural gas plays an important role to meet growing global demand with lower emissions compared to other fossil fuels and this acquisition supports our efforts to build an integrated global gas business to ensure we continue providing a secure, reliable and responsible supply of natural gas.”