Bigger role for natural gas, says Petronas VP
Published on: Tuesday, May 27, 2014
Natural gas will play a central role in meeting the world's increasing energy demand in the coming decades, said Mohamad Johari Dasri, Vice President, Production Malaysia, Petronas Carigali Sdn Bhd. He said one possibility of trading natural gas is in the form of liquefied natural gas (LNG) which is currently representing almost 30 per cent of the imported natural gas worldwide.In his keynote address titled "The Oil and Gas Industry in the Next Five Years", he said the global energy map is changing, with potentially far-reaching consequences for energy markets and trade. ADVERTISEMENT It is being redrawn by the resurgence in oil and gas production in the United States and could be further reshaped by a retreat from nuclear power in some countries, continued rapid growth in the use of wind and solar technologies and by the global spread of unconventional gas production, he said. He said taking all new developments and policies into account, global demand has surged nearly 30 per cent to 88 million b/d (all liquids) since 1995 and expected to expand by around 12 per cent and to make up around 30 per cent of the world energy mix by 2020, according to EIA reference scenario. "The share of gas, on the other hand, is expected to be around 22 per cent by 2020. Industrialised countries will continue to consume most of the energy, while the bulk of demand growth is expected to come from the Asian developing countries, in particular from the booming economies and populations of China and India." ADVERTISEMENT We may have had predictions of the end of the oil age for over 100 years, but as I am sure you are all aware resources have continually expanded both geographically and by volume, and we expect this to be the trend for the foreseeable future, he added."Putting figures to these statements, estimates from the US Geological Survey indicates that ultimately recoverable reserves have practically doubled since the early 1980s, from just 1,700 billion barrels to over 3,300 billion barrels. Almost a 100 per cent increase."
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He said this has been driven by new technologies, which enable development of oil and gas resources in remote regions, in the deepwater shelf, in the Arctic, and in the low-permeability shale formations. "For example, 10 years ago the limit of development in the deep water of the Gulf of Mexico was 3,000 feet. Now it is 8,000 feet," he said. Elaborating on the new sources of supply, Mohd Johari said the growth in North American unconventional gas production has generated great interest in developing similar reservoirs overseas. "Many countries are allotting exploration acreage with the intent of producing unconventional gas, inviting a varied group of companies into this play. What is more, some governments are actively encouraging unconventional gas production by offering more attractive terms. While the risks to this play remain large - driven by lack of infrastructure and regulation - this play is continuously maturing and can be expected to make a significant contribution to global gas supply in the medium to long term," he said. The IEA forecasts that unconventional sources of gas will represent 26 per cent of global supplies by 2035, up from 14 per cent in 2010. "One-third of the gas reserves in the world are located offshore, remote gas fields. In many cases these gas reserves are considered to be stranded. In fact, where the gas field is located far from the shore, the transport via a pipeline may not be a technically, economically feasible solution. As a consequence there is growing interest to unlock and monetise these reserves with floating facilities capable of liquefying and storing natural gas."In addressing this growing demand in a sustainable and environmental-friendly manner, he said what needs to be recognised is that the industry is vital to the future of all countries of the world. "Therefore, climate change and the protection of the environment continues to be among key sustainable development issues in the oil and gas industry. The industry is focused on efficient use of natural resources, the reduction of carbon emissions, and mitigating the impact on the environment while meeting the world's growing energy needsÉof course, we are no exception." He said for Malaysia, the foremost energy challenge lies in meeting rising demand, in view of increasing population and economic expansion, whilst at the same time domestic production continues to experience natural decline."With GLNG Australia and Progress Energy Canada in our portfolio, we are also expanding into the uncharted waters of floating LNG vessels, which enable monetisation of stranded gas in small and scattered conventional fields in Malaysia. PFLNG 1 is expected to start-up as early as Quarter 4 2015, making it the world's first FLNG facility which, will be located in Malaysia's Kanowit gas field, 180 kilometers offshore Sarawak," he said. He said the project comprises the development of a 1.2mtpa LNG facility and would liquefy and offload natural gas produced from the floating facility.He said Petronas has offered new incentives and commercial terms to promote upstream activities, in order to retain investment attractive in those challenging areas, which includes the promotion of blocks with new commercial terms and conditions. "The Malaysian government also recently approved incentives under the Petroleum Income Tax Act (2010) to promote the development of new oil and gas resources and to develop technically-challenging resources," he said.He said these include investment tax allowance of between 60-100 per cent of capital expenditure to be deducted against statutory income; reduced tax rate from 38 per cent to 25 per cent for marginal oil field development; Accelerated Capital Allowance to five years from ten years for marginal oil field development; Qualifying Exploration Expenditure; and waiver of export duty on oil produced and exported from marginal oil field development. He said these will also spur more involvement from local companies in venturing into the industry, subsequently building the nation's capability in managing our treasured resources.Mohd Johari said side by side with technology the issue of climate change is among the top in Petronas' agenda. "Petronas endeavours to use resources such as energy and water responsibly in all our operations and we aim to reduce our carbon footprint through new and ongoing initiatives. As an example Patronas' Working Groups for Carbon and Water have performed baseline assessments and have identified opportunities for immediate savings," he said. Stay up-to-date by following Daily Express’s Telegram channel.
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"We have developed a guideline for water conservation for onshore process facilities. Our Water Conservation Working Group has performed a water balance assessment and identified opportunities for savings," he added.