The Financial Times – Andrew Ward

Producers are investing heavily in LNG projects to compete with wind and solar. But is too much capacity being added?

It took eight weeks for the world’s largest floating gas production vessel to be hauled by tugboats from a South Korean shipyard to the spot almost 500km off the north-west coast of Australia where it was moored last month.

For the next 25 years this red-hulled Goliath — the length of four football pitches and nine-times the weight of the UK’s new aircraft carrier when fully loaded — will harvest gas from subsea wells and convert it into super-cooled liquefied natural gas. Tankers will visit the ship once a week to offload its LNG for export.

The $14bn Prelude project, led by Royal Dutch Shell, is the latest in a surge of new LNG capacity which promises to reshape the oil and gas industry — and with it, the energy markets they serve. Chevron’s Wheatstone LNG development in Australia is due to start producing this month, on the heels of its nearby Gorgon project last year, after a combined $88bn of investment. ExxonMobil, BP, Total and Eni have also made big commitments.

Supplies of LNG are on course to increase by 50 per cent between 2014 and 2021. That implies the opening of a new LNG “train” — the facilities that condense gas into liquid form to allow it to be transported long distances by ship — every two to three months. Spencer Dale, chief economist at BP, calls that a “quite astonishing” rate of growth.

The investments are part of a wider dash for gas among the biggest energy companies, as the industry bets that the clean characteristics of gas compared with oil and coal will allow it to keep growing as other fossil fuels decline.

Read Andrew Ward’s full article on the Financial Times website.