If the world is to truly advance towards the path of bringing global temperatures down to two degrees, it could have a significant impact on the level of investments pumped into the search for gas says Wood Mackenzie. According to the energy consultancy’s latest analysis, a world on a 2-degree pathway could significantly reduce upstream gas investments by 65% through to 2040. The company’s base case outlook projects some 200 billion barrels of oil equivalent (bnboe) of new gas resource developments needed to meet demand through to 2040.
It said that major contributors include Qatar with its additional Liquefied Natural Gas (LNG) mega trains, and the US, Russia and China. Also known as the ‘Big 4’, Wood Mac said that these countries combined currently account for almost half of global gas supply. It said that the ‘Big 4’ is expected to meet 60% of global gas demand by 2040.
Commenting on this outlook, Wood Mackenzie’s Asia Pacific Vice President Gavin Thompson said, “We estimate almost US$2 trillion of capital is needed to deliver this growth in supply. However, a 2-degree demand scenario dramatically alters this, with future supply requiring a more modest, though still considerable, US$700 billion of new investment as global gas demand peaks earlier.”
“Sustainable investment is booming and investor activism on carbon has gone mainstream as more fund managers embrace ESG(Environmental, social and corporate governance) screening. This increasing scrutiny of gas’ carbon intensity is shaping investment decisions on future supply.”
Although gas’ low carbon intensity on burning makes it the cleanest hydrocarbon, LNG still ranks amongst the most emission-intensive resource themes across the upstream sector. Wood Mac was keen to note that significant emissions are released through the combustion of gas to drive the liquefaction process and any CO2 removed prior to entering the plant is often vented into the atmosphere.
Taking this into consideration, Wood Mac said that the gas industry is at a critical juncture while adding that those who are part of it need to respond in an environmentally friendly way soon.
