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Qatar’s North Field East LNG liquefaction project, carbon capture, and the future of LNG

  • Market Insight 12 April 2021 12 April 2021
  • UK & Europe

  • Projects & Construction

In February 2021 Qatar Petroleum (QP) announced that it had reached final investment decision (FID) in relation to its US$29 billion North Field East LNG Liquefaction Project (NFE). An onshore engineering, procurement, construction and commissioning (EPCC) contract was awarded to a joint venture between Chiyoda Corporation and Technip Energies.

Qatar’s North Field East LNG liquefaction project, carbon capture, and the future of LNG

QP will award a further agreement to build storage tanks shortly and finalise other project agreements by the end of the year. In this update, partner Stephen Jurgenson describes the project in the context of the predicted growth of the LNG market over the next two decades and the potential role of LNG in achieving net zero.

NFE will be world’s largest LNG liquefaction project, and comprises four LNG trains plus facilities for gas treatment, natural gas liquids recovery, helium extraction and refining.  The project will increase Qatar’s LNG production capacity by about 50%, and will produce LNG, condensate, LPG, ethane, sulphur and helium. Start-up is scheduled for 2025.

NFE will include a carbon capture and storage (CCS) facility to capture CO2 emissions from the project. The CCS facility will be the largest of its kind in the LNG industry, and will be part of a CO2 capture and storage cluster in Ras Laffan in Qatar.  Power for the facility will be sourced from an 800 MW solar power plant under construction nearby, further reducing the project’s carbon footprint.

LNG liquefaction projects are energy intensive complex industrial projects.  The integration of CCS in the QFE design is a major step towards reducing the carbon footprint of QFE. Other LNG liquefaction projects such as Arctic LNG 3 in Russia are similarly proposing to proceed including CCS at the outset. The upfront investment in CCS, without there necessarily being a market to price the disposal costs of captured CO2 and pass the cost through to LNG buyers, is a sign that developers of such projects are willing to take a commercial risk on the investment in CCS with the objective of preserving value in the overall LNG liquefaction facility as the world strives moves to net zero carbon emissions. The reliance on renewable energy will further achieve this objective, and it is likely that other LNG liquefaction projects will secure dedicated power supply from renewable sources, for example, Total, who are considering solar power for Oman LNG.  

The willingness of the Qatar to invest in NFE, and other proposed LNG projects, demonstrates the confidence that producers have in the long term outlook for LNG, and the role of LNG in achieving net zero. Shell, the world’s largest LNG supplier, is expecting long term demand for LNG to double from its present level to about 700 million tonnes per annum by 2040. This is despite the disruption in 2020 caused by the coronavirus pandemic, which has been estimated to have caused a 4% drop in demand for gas. Global LNG demand is expected to rebound after 2021, led by demand from Asia, particularly China and India, as those countries look to transition from coal fired power generation.

In the long term LNG will have a role either in gas fired power generation (with CCS) or in the future hydrogen supply chain. It may become more economical, energy efficient and/or CO2 efficient to ship LNG for reforming (with CCS) into blue hydrogen at destination for use in power generation, compared to alternative methods to transmit hydrogen by pipeline, by shipping liquified hydrogen, or as ammonia.  The economics of the hydrogen value chain, and whether LNG is a competitor of or compliment to hydrogen, will likely develop over the next 10 years.   LNG is sometimes described as a “transitional fuel” given targets to achieve net zero by 2050, but recent developments suggest a long transition is possible, and even that there may be a permanent place for LNG in the energy mix.

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