- G7 leaders to discuss new sanctions targeting Russia's oil and gas sector, potentially impacting global oil prices.
- Germany advocates for increased public investment in natural gas production, signaling a shift in their stance on fossil fuel resources.
- These 5 oil and gas companies offer promising solutions for decarbonizing natural gas and reducing its environmental footprint.
Next week, the leaders of the G7 countries will meet in Japan. Traders and investors in the energy industry should take note of this meeting because there could be some significant outcomes for oil and gas.
For example, there are plans to discuss new sanctions for Russia with the aim of undermining Russia’s ability to produce oil and gas in the future. This could be bullish for oil prices in the longer run since a large amount of discounted Russian oil on the market today is keeping oil prices low, despite OPEC’s attempt to curb supply.
Another consequential outcome could be a unified endorsement of the need to invest in more natural gas production. Germany is pushing for G7 leaders to endorse public investment in the gas sector.
This seems like an abrupt change from a European country that has, in the past, supported calls to wind down investment in new fossil fuel resources. But this position is actually much more consistent with the reality that Germany, and all other industrialized countries, need fossil fuels and will continue to need them for a long time to come.
The development of renewable energy sources is still lagging far behind our global consumption, and growing economies must supply energy to their citizens and businesses. Instead of cutting investment in new oil and gas resources, industry and government should promote methods that will make the production and transportation of needed fossil fuels cleaner and more efficient.
Natural gas has long been lauded as the cleanest burning fossil fuel—in fact, switching from coal to natural gas helped the United States cut emissions from power plants while increasing the amount of electricity generated over the past fifteen years. However, the production and transportation of natural gas does contribute significant greenhouse gas emissions.
Hopefully, world leaders will endorse natural gas as a necessary fuel for the present and future of the global economy and will also endorse policies that incentivize companies to make natural gas production and transportation cleaner.
Investors with an interest in this sector should be aware that some oil and gas companies are already employing cutting-edge technologies to decarbonize their natural gas sectors. As global leaders move to craft policies that prioritize needed fuels while also protecting the environment, these methods and technologies could become more attractive to energy producers.
natural gas liquefaction is an intensive process that is necessary to transport natural gas across the sea. The process itself, as well as the transportation of the liquefied gas in very cold temperatures, creates pollution and leaves a significant environmental footprint.
Seatrium Limited (SGX:SEAT) (formerly Sembcorp Marine) has developed an array of technologies that can be applied to existing liquefied natural gas (LNG) carriers to reduce their carbon footprints.
One of the most compelling new developments is a method to re-liquify gas that reverted to gas form during transport. Typically, this gas is just wasted and contributes to air pollution, but with Seatrium’s new technology, it can be captured and returned to its liquid state while at sea. Older LNG carriers can be updated with this technology, so employing it does not even require buying new ships. In fact, Chevron Corp. (NYSE:CVX) is having its entire fleet retrofitted with re-liquefiers from Seatrium.
CMA CGM is pioneering the use of combination fuels that reduce the carbon footprint for maritime transportation. Shell (NYSE:SHEL) recently signed a Memorandum of Understanding (MoU) with CMA CGM to advance the development of low-carbon marine fuels that will help reduce the carbon footprint of LNG and oil transportation.
In addition, the two companies are cooperating to develop systems to blend natural gas and hydrogen so that existing natural gas systems can utilize more hydrogen. The idea is that blending hydrogen with natural gas reduces emissions because hydrogen does not emit greenhouse gases when it is burned.
Carbon capture and storage (CCS) technology has long been a focus for reducing the carbon footprint of oil and gas development. It has finally advanced to the point where companies are able to put it into practice. TotalEnergies (NYSE:TTE) is currently building an innovative CCS facility alongside an LNG project in Papua New Guinea.
Total’s CCS project will capture 1 million tons of carbon dioxide per year and inject it back into the natural gas reservoir during production. The natural gas will travel via pipeline to a facility in Port Moresby for liquefaction and export. This will reduce the carbon intensity of LNG production from the very start of production, and the carbon dioxide will never hit the atmosphere. The project is expected to come online in 2027.
These are just a few of the new technologies that show promise for reducing the carbon intensity of natural gas and other fossil fuel use. As more oil and gas companies put these technologies to use in their global operations, the carbon intensity of natural gas should decline.
At this year’s edition of Gastech 2023, which will take place in Singapore from September 5th-8th, energy and policymakers will get together to drive such innovation further.
This will help ensure that natural gas has the support it needs to maintain a prominent position in powering the global economy. It seems as though G7 countries are finally realizing that natural gas cannot be phased out as quickly as they thought, so the right move is to invest in technologies and processes to make natural gas as clean and efficient as possible.
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Disclosure: The author does not own any of the securities mentioned.