Page 5 - Euroil Week 43 2019

EurOil COMMENTARY EurOil
Shannon LNG under pressure
The proposed Shannon LNG project is running into environmental opposition amid news that it could be fast-tracked
IRELAND
WHAT:
New Fortress Energy’s Shannon LNG project has encountered strong environmental opposition.
WHY:
The scheme has been listed as a project
of common interest (PCI) by the European Commission.
WHAT NEXT:
Ireland’s government is planning a security of supply review before allowing the project to proceed any further.
THE proposed Shannon LNG project is running into opposition as its backer, US-based New Fortress Energy, tries to move it forward. Recent news that the project may be fast-tracked led to an outcry by environmentalists, who oppose construction of the import terminal on the grounds that it would import US LNG, which uses shale gas as feedstock. Hydraulic fracturing – the technique used to extract oil and gas from shale formations – has been banned in Ireland, and opponents of Shannon LNG claim it would be hypocritical for the country to import shale gas from elsewhere instead.
Responding to the criticism, Irish Minister for Climate Action and Environment Richard Brutonsaid:“Atthisstage,otherthanthestream- lining of the permit granting processes, the only practical benefit to Shannon LNG being des- ignated as a project of common interest (PCI) is the possibility of applying to the Connecting Europe Facility for grant aid.”
However, Bruton also said the government would not support any grant application for European Union funding by the Shannon LNG project until “a security of supply review has been completed and considered” by both the government and the Irish legislature.
“Ireland is one of the most dependant coun- tries on fossil fuels,” Bruton said, adding that the government had a fundamental duty to protect the country’s energy security.
“In the next decade we will fully exit from peat and coal to generate electricity and we will reach 70% renewable electricity. In making these critical changes, we must ensure our energy security is maintained. It is critical to protect- ing our people, our homes, our farms and our businesses.”
The remaining 30% is still expected to be gen- erated from fossil fuels, with Bruton noting that back-up supply would also be required to make up any renewable shortfalls.
Bruton used an example of a recent 30-day period, when wind generation supplied 25% of Ireland’s electricity. In this period, one day wind power accounted for only 4% of electricity pro- vided and on another day it accounted for 62%. Gas is likely to continue being used for back-up supply according to Bruton.
The Climate Change Advisory Council sup- ports this view, saying that continued explora- tion and production of offshore gas reserves could be consistent with a transition to a low-carbon future.
However, vociferous opposition to shale gas in Europe has already contributed to a number of upstream projects being cancelled, and it would
not be surprising if it were to affect midstream developments such as LNG terminals as well. The Irish government will have to proceed care- fully with Shannon LNG if it wishes to minimise roadblocks caused by opposition to the project. Public support for the project could also be won through job creation and a boost to the local economy, though this will need to be balanced against environmental concerns.
Bruton has asked the European Commis- sion if a review into the implications of import- ing LNG into the EU has been carried out “in terms of a sustainable, secure and competitive European energy policy; and if not, that it should be undertaken”. He said this included LNG that uses both conventional and uncon- ventional gas as feedstock. Defenders of the project, however, have noted that there is no difference, and no way of telling the origin of the gas with cargoes that are, for example, traded on the spot market.
The Irish Times noted that the commission has confirmed inclusion on the PCI list “does not mean the project has at that time complied with all environmental obligations under EU legisla- tion”. But the project will need to comply with all relevant legislation as it moves forward.
Slow process
Shannon LNG has been through several own- ership changes as it has struggled to move for- ward. The current plan being developed by New Fortress involves an integrated gas-to-power operation. The terminal would have four storage tanks, each with storage capacity of 200,000 cubic metres, and would have overall gas send-out capacity of up to 28.3mn cubic metres per day.
New Fortress also have planning permission to build a 500-MW combined heat and power (CHP) plant, which is expected to power new data centres that are being planned to be built in the region.
The project is well-positioned to receive LNG from the US – leading to the outcry from oppo- nents of shale gas and the use of fracking. How- ever, a map on the project’s website also shows routes to the plant from the Middle East and the Arctic – both regions where LNG exports are booming.
Once the Irish government reviews Shan- non LNG and allows New Fortress to proceed, inclusion on the PCI list should pave the way to fast-track planning approval and access to a pool of more than €5bn ($5.6bn) in EU financial sup- port. But, given the reaction to the project this month, further progress will be closely scruti- nised, and likely slow.™
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