Increasing world energy demand, high oil prices and environmental emission concerns underpin a global move for more economic and environmentally cleaner primary energy sources than traditional oil based and coal energy sources. Natural gas is currently the preferred primary fuel source due to its lower cost and reduced emissions.
LNG is formed by the liquefaction of natural gas, through cooling and refrigeration and takes up 1/600th the volume of natural gas, making it economically viable to transport over long distances.
The Energy Information Administration, in its International Energy Outlook 2004 (IEO2004) reference case, stated that natural gas is the fastest growing primary energy source and is projected to increase by nearly 70% between 2001 and 2025 (2.2% annually), with even more robust growth expected among developing nations (2.9% annually). Projected increases in world natural gas demand will require accessing new gas resources, including gas reserves currently stranded or flared. The fact that many sources of natural gas are far from demand centres and existing gas pipelines, coupled with cost decreases throughout the LNG production and delivery chain, has made LNG increasingly competitive.
The Company’s business model focuses on the development of fully vertically integrated small to medium scale LNG projects. This will necessitate accessing, and if required investing in, low cost gas feedstock through long term gas supply contracts. The Company will only directly invest in proven gas reserves and not assume gas exploration risk.
The Company’s AAC Technology, as confirmed by an independent study by Twister BV, a Shell Group subsidiary, will markedly improve the efficiency of the cooling phase of LNG production, including reduced capital and operating costs and reduced greenhouse gas emissions. The AAC Technology is based on well proven technology in other industry applications and its use in LNG production represents a “step change”, rendering it economic to produce competitively priced LNG in modest sized plants.
Tuesday 7 September 12:58 PM
North West Shelf LNG decision set for '05 - BHP ADVERTISEMENT
SYDNEY, Sept 7 (Reuters) - A decision on whether to proceed with a A$2 billion ($1.4 billion) expansion of Australia's North West Shelf liquefied natural gas joint venture may not be made until as late as mid-2005 and would hinge on price negotiations, partner BHP Billiton Ltd./Plc (ASX: BHP)BLT.L said on Tuesday.
The North West Shelf, off the coast of Western Australia, is underpinned by long-term contracts extending to 2009 with Japanese utilities, which are up for renewal, BHP Billiton energy group president Phil Aiken said.
Joint venture operator Woodside Petroleum Ltd. WPL.AX has said it expects a final investment decision on building a fifth liquefied natural gas (LNG) train -- which would boost annual production by 4.2 million tonnes -- by the end of 2004 or early next year.
However, Aiken said the decision-making process on a fifth train would become clearer once price talks over supplying Japanese and Chinese customers had advanced.
"When those contracts give us some idea about how they are going ... we can then make a decision on train five," Aiken told reporters on the sidelines of the World Energy Congress in Sydney.
"But it is unlikely to be made until the first half of next year," he said.
The North West Shelf venture sells more than 11 million tonnes of LNG to Japan each year.
Starting in 2006, the project is due to begin shipping gas to China under a long-term supply deal estimated to be worth A$25 billion.
Other North West Shelf partners are ChevronTexaco Corp CVX.N, BP Plc BP.L, Japan Australia LNG (MiMi) Pty Ltd and Royal/Dutch Shell Group RD.AS. ($1=A$1.45)
ASX Price at posting:
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