McDermott applies scale and breadth of capabilities to meet the challenges of LNG sector decarbonisation

In an exclusive interview with Gastech News, Rob Shaul, Senior Vice President, Low Carbon Solutions at McDermott, discusses integrated project delivery, new LNG plant technology, and uncertainties in North American LNG markets.

What is your view on the energy trilemma. In a time of volatile and high energy prices, how can we balance energy security and affordability with sustainability?

Tackling the energy trilemma will ultimately rest on the world’s ability to cultivate and harness new technologies to lower the carbon footprint of existing energy systems and develop new, systems that check all the boxes.

The immediate challenge is meeting supply demand while balancing energy reliability, affordability, and sustainability. If we look at the prime sources of energy, i.e., oil, coal, piped gas, LNG, renewables, and nuclear, none can satisfy all three requirements. Renewable energy is clearly best-in-class with respect to sustainability and is becoming increasingly affordable, but it can’t yet meet global demand. Major investment and scale-up of infrastructure are required to improve the reliability of supply.

Energy supply from hydrocarbons is affordable and reliable, but has higher emissions throughout its value chain, particularly in the transportation sector. There are many opportunities to abate these emissions, but these techniques come at a cost. McDermott has the scale and breadth of capabilities to offer integrated project delivery and modularization solutions that help control capital expenditures.

Piped natural gas and, by inference, LNG are affordable, and have relatively lower emissions than coal and oil. As such, natural gas and LNG are well positioned to bridge the gap in the short-to medium-term, to satisfy the shortfall from renewable sources.

We’ve seen increased adoption of e-drives as a low-carbon power solution for LNG facilities. How significant an impact do they have on emissions versus gas turbines and what do they add in terms of extra cost?

When taking Scope 1 and 2 emissions into consideration, an e-drive LNG plant has the potential to significantly reduce total emissions in comparison to a gas turbine driven LNG facility, in particular if the power is sourced from renewable resources or from highly efficient combined cycle power plants (Scope 2).

A good example of a lower-carbon solution is the Woodfibre LNG project – among the world’s lowest emission LNG facility. The imported power to the LNG facility is primarily from hydroelectric, a renewable source. The project will replace coal-fired energy sources in Asia and is projected to reduce global emissions by 3.5 million tonnes CO2e per annum.

By using e-drive in conjunction with renewable power, greenhouse gas emissions could be reduced by 80%-90% when compared to the traditional gas turbine driver configuration used by most of the world’s LNG facilities. When considering the auxiliary systems required to operate gas turbines and e-drive compressors, the cost difference between the two solutions is not significant. However, the cost of power supplied through renewable sources is transferred from a capital cost to an operating cost.

What are the implications of current domestic dynamics in North America on global LNG markets?

Every capital project attempts to follow a development path that minimizes commercial, technical, social, and regulatory uncertainties or risks. With the domestic politics of Canada, the US, and Mexico in flux, there’s regulatory uncertainty across North America.

The new president-elect of Mexico, Claudia Sheinbaum, is an expert in energy systems. She seems committed to the energy transition, mitigating climate change, decarbonization, and the expansion of renewable energy. She has also been supportive of the national utility, CFE, and PEMEX. However, it’s not clear the role of LNG in her vision of Mexico’s energy future or how US-owned LNG export facilities or gas pipelines fit into it.

In the US, the Biden Administration’s pause on the Department of Energy issuing export licenses to LNG projects for non-FTA countries basically prevents those projects without the license from taking final investment decisions (FID). It also represents an abrupt change in a process that was seemingly well understood by investors and project developers over the last ten years.

Interprovincial pipelines or rail transportation from Alberta to BC have always been difficult. While federal and provincial laws seem to provide some guidelines around carbon taxes, it’s probably fair to say that it’s somewhat ambiguous how emissions requirements in BC may evolve over the next 15-20 years.

It’s these sorts of domestic regulatory uncertainties that create risk for project timelines or a project’s ability to be able to operate, thereby potentially slowing-down LNG development in North America.