Page 5 - NorthAmOil Week 41 2021

NorthAmOil COMMENTARY NorthAmOil

LNG competitiveness

in the spotlight

LNG producers are figuring out how to be competitive

and sanction new capacity against a backdrop of

demand volatility

GLOBAL THE LNG industry is contending with a mix of Infrastructure’s president, Dan Brouillette –
short-term supply issues and long-term demand agreed that existing producers are at an advan-
WHAT: uncertainty as a result of the energy transition. tage when it comes to adding capacity. Walker
Some LNG players will Against this backdrop, some producers will find noted that traditionally, selling 1-2 trains’ worth
find it easier than others it easier than others to move forward with new of capacity was required to sanction a project,
to sanction new capacity. liquefaction capacity additions. adding that he still believed new entrants would
New and established producers alike are generally need to do this in order to achieve
WHY: figuring out what it will take to be competitive economies of scale.
Despite the current in this environment, and this was one of the “For the existing projects … you have more
gas shortage, long- topics that was discussed at last week’s Energy optionality to add incremental, smaller vol-
term demand remains Intelligence Forum 2021 event, held online. A umes,” Walker said. “Having said that, we’re
uncertain and producers panel consisting of companies with existing looking at our next expansion probably being
with existing capacity are or planned US LNG terminals concluded that 10mn tonnes [per year],” he continued. “I think
at an advantage. those with existing capacity are at an advantage, there’s a wide range of options for players, and
but did not rule out new projects reaching the we’re going to see all of the above. I think we’ll
WHAT NEXT: final investment decision (FID) stage. Indeed, see some big bets, we’ll see smaller quantums
New projects, including one of the panellists, Glenfarne Group’s founder added to existing projects. I have to say it’s eas-
in the US, are still moving and CEO, Brendan Duval, talked about what his ier for existing projects to expand in the current
towards final investment company was doing to reach FID on the Texas marketplace.”
decisions. LNG project at the Port of Brownsville. Indeed, the speakers pointed to the energy
transition as exacerbating this, because green-
New capacity field projects now have to do more than ever
Duval and his co-panellists – Cheniere Ener- before to demonstrate their environmental cre-
gy’s vice president of LNG strategy and com- dentials – at an extra cost.
munication, Andrew Walker, and Sempra “The new entrants are going to still be a factor

Companies with existing
operations, such as
Cheniere Energy, can
incrementally add new
liquefaction capacity.

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