In focus: Is natural gas crucial element of energy transition?

With the world adapting to emerging sources of supply and decarbonization technologies, the discussion about which fuel is the top contender for the successful energy transition continues.

Despite the growing opposition to fossil fuels, some consider natural gas, primarily LNG, as the leading transition fuel, which will bridge the gap and pave the way towards the sought-after low-carbon and green energy future.

While there is no one-size-fits-all solution to the energy transition challenge, natural gas is often hailed as the backbone of the energy mix. Therefore, gas investments and production are expected to be on the rise to meet the market demand and steer clear of potential future shortfalls in supply.

On October 5, 2023, it was reported that UAE’s energy major Abu Dhabi National Oil Company (ADNOC) made a final investment decision (FID) and awarded a batch of contracts for a giant gas development, which aims to operate with net-zero carbon dioxide (CO2) emissions, reinforcing the UAE player’s accelerated decarbonization agenda and supporting its net-zero by 2045 ambition and aspirations to double its carbon capture capacity target to 10 mtpa of CO2 by 2030.

Abdulmunim Al Kindy, ADNOC Upstream Executive Director, called natural gas an important transition fuel, noting that ADNOC will continue to “responsibly unlock its gas resources to enable gas self-sufficiency for the UAE, grow our export capacity and support global energy security.”

In the U.S., Congressman Steven Horsford (D-NV), Chairman of the Congressional Black Caucus (CBC), pointed out that America is in need of an energy strategy that features natural gas as a crucial element along with renewable energy to come to grips with climate and energy challenges.

Referring to the latest U.S. Government investments in energy transition, Horsford said: “Yes, we do have a climate crisis. And that is why the legislation that’s been passed under President Biden and Vice President Harris is all about making the largest investment of any country in the world. But that doesn’t mean we’re going to convert to it overnight without the technologies, without the investments, without the infrastructure. That’s why it’s important to have natural gas as a reliable energy resource, in addition to the fact that it provides a ton of jobs and good paying jobs, union jobs, that really do benefit the communities, particularly rural areas.”

To note, when it comes to the U.S., the beginning of October 2023 was eventful. The U.S. Department of Energy’s (DOE) Office of Energy Efficiency and Renewable Energy (EERE) issued a funding call for research projects that are expected to reduce risk and improve the environmental compatibility of marine energy and offshore wind deployments in the U.S., and Texas-based energy company NextDecade officially started the construction of Phase 1 of the 27 mtpa Rio Grande LNG export facility in Brownsville.

As for LNG endeavours in other parts of the world, the European Commission approved, under EU State aid rules, a €106 million Greek measure to support the completion of the construction of Gastrade’s LNG terminal in Alexandroupolis, and African Energy Chamber (AEC), an energy advocacy group, released its new quarterly market-focused report, providing outlook and key insight into the continent’s LNG trends and showing that the African gas sector’s center of gravity is undergoing a geographical shift.

It is also worth mentioning that as months go by, methanol seems to be gaining more attention; especially in the shipping industry, where the fuel has been increasing its presence.

At the beginning of October 2023, Danish short sea operator Unifeeder signed a time-charter deal for up to four methanol-powered containerships, and Japanese shipbuilder Tsuneishi Shipbuilding received an order for four methanol-fueled 5,900 TEU containerships.

Furthermore, Jan De Nul placed an order for an extra-large cable-laying vessel (CLV) at China’s CMHI Haimen shipyard, which, with its cable-carrying capacity of 28,000 tons, is said to be the world’s largest. This vessel is said to be powered by engines that can run on biofuel and green methanol.

Commenting on methanol-capable vessels, Jesper Kristensen, Group CEO of Unifeeder Group, said: “As the number of methanol-capable vessels increases in both our operations and those of our customers, my hope is that this drives an increase in innovation and production amongst methanol producers. This will then complete a virtuous circle and ensure we can operate more and more methanol-capable vessels with the right color of methanol fuels in our networks.”

When it comes to methanol production, C2X, a recently established company backed by A.P. Moller Holding as majority owner and A.P. Moller–Maersk as minority owner, has signed a framework agreement with the Egyptian government to enable and accelerate large-scale production of green methanol in Egypt.

C2X said the company’s ambition is to have a production capacity of more than three million tons per year by 2030 from project opportunities in advantaged locations around the world.