Gas

LNG global demand doubling to 700M tons by 2040, Shell Energy report forecasts

By Rod Walton, Power Engineering and POWERGEN+ content director

Liquefied natural gas (LNG) is not slowing down from asserting a growing global role in power generation, transportation and industrialization as nations try to juggle net-zero carbon goals with grid resiliency, according to many energy experts.

In fact, a new LNG Outlook by energy giant Royal Dutch Shell forecasts that global LNG demand will basically double by 2040. These projections came as Shell Energy executives spoke in a live webcast Thursday morning.

Global LNG demand sustained at close to 360 million metric tons annually in 2020, a slight increase over the previous year. Even so, the market resiliency was considered remarkable in the wake of the global GDP downturn due to the COVID-19 outbreak.

“Overall, global LNG demand is estimated to hit 700 million tons by 2040,” reads the Royal Dutch Shell press release preceding the webcast. “Asia is expected to drive nearly 75% of this growth as domestic gas production declines and LNG substitutes higher emission energy sources, tackling air quality concerns and meeting emissions targets.”

In the U.S., companies such as Cheniere Energy and Sempra LNG are leading construction of LNG terminals on the Gulf Coast. Houston-based Cheniere, in its earnings report one day ago, forecast that it sees decades of LNG growth ahead.

See POWERGEN video interviews on LNG with Energy Capital Vietnam and Eagle LNG here

Much of the domestic LNG market is moved from prolific shale gas plays down pipelines to the gulf coast liquefaction and terminal facilities. Natural gas is converted to LNG by chilling it to minus 260 degrees Fahrenheit (162 degree Celsius), thus making its more concentrated and stable for shipping travel.

The LNG can be moved from the U.S. to international markets which desire it as a lower emitting energy resource than coal-fired power generation. Nations in Asia and Europe have signed deals with U.S. companies to move the LNG and then re-gasify it upon arrival.

The Royal Dutch Shell LNG report noted that global prices started at record lows but rose to six year highs by the end of 2020, driven upward by tightening supplies and higher demand in parts of Asia.

“As demand grows, a supply-demand gap is expected to open in the middle of the current decade with less new production coming on-stream than previously projected,” the Royal Dutch Shell report reads. “Just 3 million tons in new LNG production capacity was announced in 2020, down from an expected 60 million tons.

The company estimates that more than half of future LNG demand will come from nations with net-zero emissions targets. “The LNG industry will need to innovate at every stage of the value chain to lower emissions and play a key role in powering hard-to-abate sectors,” Royal Dutch Shell’s forecast reads.

Utility holding company Sempra Energy’s Cameron LNG export facility is now operating with three liquefaction trains at the Louisiana Gulf Coast terminal. Cameron LNG is jointly owned by affiliates of Sempra LNG, TOTAL SE, Mitsui & Co., Ltd., and Japan LNG Investment, LLC, a company jointly owned by Mitsubishi Corporation and Nippon Yusen Kabushiki Kaisha.

Sempra Energy indirectly owns 50.2 percent of Cameron LNG. Sempra LNG and its partners are developing Cameron LNG Phase 2. This will add two additional liquefaction trains and one more LNG storage tank.

The Golden Pass LNG export terminal project is underway along the Texas Gulf Coast. The Golden Pass export terminal is itself a joint venture between affiliates of Qatar Petroleum and ExxonMobil.

It will include the construction of three liquefaction process trains, each with a nominal output of approximately 5.2 million metric tons per year. 

(Rod Walton is content director for Power Engineering, POWERGEN International and the POWERGEN+ online series, which resumes in April with a focus on Optimizing Plant Performance. Walton is a 13-year veteran of covering the energy industry both as a newspaper journalist and for trade publications. He can be reached at 918-831-9177 and [email protected]).