Global gas industry trends

Negative emission reduction technologies such as CCUS are highly valued by the oil and gas Industry Climate Initiative (OGCI), which has identified CCUS as one of its key action directions. Oil and gas companies are actively promoting CCUS business, and large-scale CCUS projects launched by oil and gas majors are becoming important accelerators for market growth. According to the report "Global Status of CCS 2020" released by the Global CCS Institute, there are 28 large-scale CCUS projects in operation worldwide at the end of 2020, and 13 of these large-scale CCUS industrial demonstration projects in operation are concentrated in the natural gas sector. Natural gas processing project.

It is important to note that despite years of development, CCUS technology has been accepted and used worldwide, but the potential, implementation difficulty and socio-economic benefits of different methods of capture and storage vary greatly. At the current carbon price, the implementation of CCUS technology is not economically feasible, and it is difficult to promote industrialization. In the gas industry's solution to a zero-carbon world, the specific path that is more promising will also depend on the maturity of the technology, business model and economics.

2. Utilize the advantages of industrial resources to develop hydrogen energy

Currently, 70% of global hydrogen production comes from natural gas. As the economic scale of hydrogen energy continues to grow and the hydrogen industry is comprehensively upgraded, green hydrogen production through renewable energy power generation will gradually become the mainstream hydrogen production method in the future, but blue hydrogen made from natural gas and combined with carbon capture technology will also maintain a certain market share. The main future development direction of oil and gas companies in the upstream is unconventional oil and gas and deep and deep sea oil and gas exploration and development, once these areas achieve breakthroughs, the most direct impact on hydrogen supply is the reduction of hydrogen production costs. From the judgment of various consulting institutions and oil and gas companies, it is expected that the global natural gas hydrogen production technology is likely to be commercialized around 2030, and the cost will be significantly reduced.

The current low-carbon transformation strategy of natural gas resource countries represented by Saudi Arabia, the United Arab Emirates and Russia is mainly reflected in two aspects. In addition to the introduction of CCUS technology in the whole industrial chain to reduce carbon emission intensity mentioned above, the other direction is to use the advantages of rich natural gas resources to develop hydrogen energy. According to the "Hydrogen energy Industry Development Plan" issued by the Russian Ministry of Energy, Russia will mainly use methane in natural gas to produce hydrogen, because the cost of blue hydrogen is low, only equivalent to a quarter or even a fifth of the cost of producing green hydrogen through renewable energy. Aramco plans to spend $110 billion over the next few years to develop the Jafurah field, which contains about 200 trillion cubic feet of gas and is one of the world's largest gas projects, and has proposed starting production in 2024 and selling 2.2 billion cubic feet per day by 2036. But Saudi Aramco decided to no longer export the gas in the form of LNG for emission reduction purposes, and instead use it to make blue hydrogen. Middle Eastern national oil companies are actively developing related technologies such as blue hydrogen, and ABU Dhabi National Oil ADNOC plans to increase its CCUS capacity by at least five times by 2030, which will lay the foundation for blue hydrogen development in the UAE.

In terms of transportation, more and more investors and management decision-makers in the energy sector have turned their attention to relying on natural gas pipelines to transport hydrogen. At present, natural gas hydrogen-doped transportation technology has been developed to meet this need. Although there are still some problems with this technology, the industry should still consider it as a development priority.

3. Carbon neutral LNG trading through carbon offsets

With the development of carbon offset businesses such as carbon capture and forestry carbon sequestration, innovative trading initiatives such as carbon neutral natural gas have become an important way out for the development of the industry. Carbon neutral LNG means that the carbon emissions generated in the upstream extraction, processing, liquefaction, transportation, regasification and final use of natural gas are fully offset by other forms of carbon reduction, thus achieving net zero emissions throughout the life cycle. For example, Shell signed two carbon neutral LNG ships with CNOOC in June 2020 to offset the full life cycle carbon emission value of the ship's LNG through tree-planting projects supported by Shell in Qinghai and Xinjiang, China. Other carbon-neutral LNG suppliers offer carbon reduction options including investing in and supporting renewable power generation projects and carbon capture projects. Under the international situation of deepening carbon emission management, carbon-neutral LNG and other new market trading varieties have gradually gained attention, and the operation mode of carbon-neutral LNG has been increasingly applied in the field of international energy trade. LNG producers are racing to add the decarbonization label and enhance the attractiveness of natural gas by delivering carbon-neutral LNG.