LNG

Unconventional Gas Technology Plays Critical Role in CCUS, Reaching Net Zero

Natural gas delivered as LNG to growing economies in Asia has a strong role to play in achieving net zero in carbon emissions, and most of that gas will come from unconventional resources.

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Loading LNG at Chevron's Gorgon project for delivery to Asian markets.
Source: Chevron

Natural gas is expected to be the fastest-growing fossil fuel through 2040, satisfying up to a quarter of global energy demand and cementing its position as a transition fuel to a low-carbon future, according to the International Energy Agency (IEA).

The IEA is in fact forecasting a 45% increase in gas demand over the next 20 years with the bulk of this new supply coming largely from unconventional reserves in the US, Canada, and Australia, and much of that will be shipped as liquefied natural gas (LNG).

Industry and governments are acknowledging the significant role that gas will play in reaching net-zero emission targets by 2050. Not only is gas a “cleaner” fuel than coal, for example, but technologies developed to produce gas from shale and hard-to-produce reserves are being applied to carbon capture and storage (CSS), carbon capture, utilization, and storage (CCUS), and the use of CO2 in enhanced oil recovery (EOR) to reduce water consumption and minimize the environmental footprint.

These topics took center stage at the Asia Pacific Unconventional Resources Technology Conference (URTeC) in November organized by SPE, AAPG, and SEG.

Speaker Mark Fitzgerald, president and CEO of Petronas Canada, a subsidiary of Malaysia’s Petronas, noted in the opening plenary that “the unconventional space will compete on a full-cycle, energy-intensive basis ,or emissions-intensity basis, with (other) fuels,” creating “a sustainable energy stream” that will power the world toward “a low-carbon future” while providing the energy needed to move a third of the world’s population “out of poverty.”

Investment in LNG Isn’t Slowing

Petronas is the world’s third-largest LNG seller. Its upstream portfolio is largely natural gas, and it is actively developing gas resources wherever they can be found to supply consumers in developing nations in Asia with affordable energy (Fig. 1).

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Fig. 1—Growth in LNG demand. Asia Pacific nations have nearly doubled their consumption of LNG over the past decade and currently consume approximately 71% of LNG produced globally.
bp Statistical Review of World Energy 2021

For Petronas Canada, this has led the company to focus on producing LNG from natural gas resources in Western Canada and projects to convert coalbed methane (CBM) into LNG in Australia.

In Canada, Petronas holds a 25% stake in the $40 billion LNG Canada project in British Columbia where the Malaysian major also lays claim to more than 52 Tcf of gross reserves and contingent resources, most of which is shale.

The Canadian government has hailed LNG Canada as the nation’s largest single private investment in the country’s history and has itself committed $275 million in public money to fund energy-efficient gas turbines that consume less fuel and minimize greenhouse-gas emissions (GHG), as well as replace the Haisla Bridge in Kitimat, BC, to support increased traffic.

The Canadian government’s Ministry of Innovation, Science, and Economic Development noted in 2019 that foreign direct investment in Canada had jumped 60% in the previous year because of the project.

Petronas’ partners in LNG Canada include Anglo-Dutch Shell (the leader in the deal with 40%); China’s PetroChina (15%), Japan’s Mitsubishi Corp. (15%), and Korean Gas Corporation (Kogas) (5%).

Australian LNG engineering company Clough won the $40 billion engineering, procurement, construction contract to build the liquefaction facility, a 670-km pipeline, and a marine terminal.

Production startup is expected in 2023 with two trains capable of producing 14 mtpa of LNG, but capacity could double with the addition of two more trains planned in a later phase of the project.

During the URTeC panel discussion, Fitzgerald pointed out that cleaner-burning natural gas derived from LNG can help to lower global GHG when used to displace higher-emitting coal-fired electricity generation in China, India, and Southeast Asia.

By 2040, some 1,500 megatons of carbon dioxide equivalent (MtCO2e) emissions could be eliminated annually by replacing coal with natural gas in fueling new power plants in those same countries, he said.

Panelist, Vello Kuuskraa, president of Advanced Resources International Inc. in Washington, DC, said blue hydrogen has potential to compete with green hydrogen as a transportation fuel, thus creating a new market for Australian gas.

The “Cleaner” Side of Coal: CBM to LNG

Petronas Canada’s Unconventional Centre of Excellence in Calgary supports its Malaysian parent’s unconventional projects worldwide with global expertise including its participation in Australia’s GLNG project, a pioneer in converting CBM into LNG.

Australia’s largest domestic gas supplier, Santos, holds an operating 30% interest in the Queensland Australia GLNG project; its partners include Petronas (27.5%), TotalEnergies (27.5%), and Korea’s KOGAS (15%).

GLNG produces 7.8 mtpa from two trains (3.9 mtpa capacity each) and drills 300 wells per year to keep resources flowing from its more than 5 Tcf of natural gas resource.

While Australia is expected to account for only 6.4% of the overall growth in global gas supply envisioned by the IEA, the country’s position as a top-tier global supplier of LNG with favorable netback pricing to the fastest-growing economies in the Pacific Rim can’t be ignored.

In 2020, Australia nosed out Qatar to become the world’s top LNG exporter with a 27.8% global market share; though Qatar remained within an eyelash of the top at 27.7%, according to the bp Statistical Review of World Energy 2021. The US placed third at 12.6% (Fig. 2).

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LNG Exports in 2020. Australia overtook Qatar as the world’s No. 1 LNG exporter. The US placed third.
bp Statistical Review of World Energy 2021

IEA forecast in 2017 that Australia’s gas production was expected to grow at an annual rate of 3.4%, faster than any other OECD country. By 2040, Australia is expected to be producing 195 Bcm in gas, more than double the 88 Bcm the IEA reported in its base year (2016). In the same period, the country’s gas exports will more than triple to 137 Bcm by 2040 compared to 45 Bcm in 2016.

Of equal importance is the prediction that LNG will account for 60% of the expansion in gas trade over the 25-year period studied by the IEA, and it is during this expansion phase that the technologies and business processes honed by the industry in developing unconventional resources over the past decade will need to be used.

“We’ve seen a transformation over the last 10 years,” Fitzgerald said. “The technology that has been applied, the rapid way in which (it has been) communicated in the age of digitalization … has unlocked big plays with huge resources … and has created a very efficient cost structure.

“In addition, the unconventional space has shown a rapid movement towards emissions reduction and a lower carbon footprint,” he concluded. This includes the applications of technologies to store captured carbon (CSS and CSUS) in unconventional reservoirs as well as EOR technologies that raise production by CO2 injection.

Making Carbon a Force for Good

In 2020, the IEA counted 19 CCUS projects as active in industry and in fuel transformation globally and concluded in its report, Tracking CCUS in Industry and Transformation 2020, that “even though CCUS is one of few technology options available to significantly reduce CO2 emissions in many industries, its deployment is woefully below levels” required to meet sustainable development scenarios of 450 mtpa by 2030 (290 mtpa in industrial applications and 160 mtpa in fuel transformation).

The IEA report cited as the most important CCUS projects to date:

  • The 0.6‑mtpa CNPC Jilin Oil Field CO2 EOR project started in 2018 which utilizes carbon dioxide captured from a nearby gas processing plant.
  • Chevron’s 4‑mtpa Gorgon CO2 injection project in Western Australia (billed as the world’s largest project of its kind when launched in 2019) which gathers carbon dioxide from natural gas processing for injection in the Gorgon gas development.
  • Two carbon trunkline projects in Alberta, Canada, launched in 2020 to capture CO2 from fertilizer production (0.5 Mtpa) and oil refining (1.3 Mtpa).

History making as it may be, Gorgon has had its hiccups with Chevron confirming that it is falling short of capturing enough CO2 to meet a 5-year target of sequestering at least 80% (about 4 mtpa) of CO2 emissions from the Western Australia gas reservoirs that feed the Gorgon LNG plant. As of August 2019, only 5 million metric tons of CO2 had been injected, according to Chevron.

Last month, Chevron Australia and its partners in Gorgon agreed as a penalty to buy carbon credits which, according to Reuters estimates, could cost about $184 million and share those costs among equity holders ExxonMobil (25% equity), Shell (25%), and Japan's Osaka Gas (1.25%), Tokyo Gas (1%), and JERA (0.417%).

Chevron issued a statement in which it said it would invest $29 million in lower-carbon projects while also buying and surrendering 5.23 million greenhouse-gas offsets to meet its government obligations.

Meanwhile, Santos reported it had signed a memorandum of understanding (MOU) with Japan’s Mitsubishi and Korea’s SK E&S to investigate producing carbon-neutral LNG from the Barossa offshore project utilizing the proposed $165-million Moomba CSS project in South Australia.

Last month, joint venture partners Santos and Beach Energy announced their final investment decision to proceed with Moomba, targeting first injection in 2024. The project boasts 1.7 mtpa in storage capacity for CO2 in depleted natural gas reservoirs.

The MOU also calls for bilateral agreements for carbon credits and potential future development of zero-emissions hydrogen. Gas from Barossa would be processed at Santos-operated Darwin LNG in which SK E&S, Japan’s INPEX, Eni, JERA, and Tokyo Gas hold interests.

Fitzgerald and other panelists stressed the importance of innovation and industry’s need to prioritize R&D investment while also giving CO2 storage equal weight in project planning to production planning itself.

Among papers presented at URTeC that focused on the technological challenges of CSS and CCUS projects in the conventional space were the following.

  • URTeC 208295 Unconventional CO2 Storage details geochemical models derived from a study of sandstone and shale oil and gas cores from the Geological Survey of Queensland, Exploration Data center, the South Australian Drill Core Reference Library, and coal-seam gas interburden samples from the Surat basin to assess the effects of CO2 on various types of rock.
  • URTeC 208308 Machine Learning Models for Predicting the Rheology of Nanoparticle-Stabilized-CO2-Foam Fracturing Fluid in Reservoir Conditions describes the use of temperature, nanoparticle concentration, salinity, foam quality, and shear rate to create models to predict apparent viscosity of nanoparticle-stabilized-CO2-foams  for fracturing purposes under harsh reservoir conditions.
  • URTeC 208385 A Novel Completion System and CO2 Fracturing Fluid Unlock the Ultratight but Critically Important S1/H8 Formations in China's Yanbei Gas Field details lessons learned by combining new stimulation techniques and integrating fracturing fluids together with the downhole completion system to triple production using a two-stage CO2 foam fracturing treatment.