Gastech 2024: Our top three takeaways
Our experts give their views on the standout themes from this year’s big industry event in Houston
3 minute read
Bob Kubis
Vice President, Americas, Gas & LNG, Consulting
Bob Kubis
Vice President, Americas, Gas & LNG, Consulting
Bob Kubis focuses on delivering natural gas, NGL & LNG solutions
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View Bob Kubis's full profileKateryna Filippenko
Research Director, Global Gas Markets
Kateryna Filippenko
Research Director, Global Gas Markets
Principal Analyst with a focus on the European gas market and the development of alternative scenarios.
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Gastech is the biggest exhibition and conference in the calendar for gas and LNG, attracting everyone from producers and infrastructure players to shippers, consumers and financiers. It’s no exaggeration to say the key conversations about the future of gas and LNG happen here. So, what was causing a buzz this year?
As the official Knowledge Partner of Gastech 2024, we brought our industry expertise and distinct viewpoint to a series of invite-only dynamic roundtables, presentations and panel sessions.
Fill out the form at the top of the page to download a series of presentations by our experts from the event, or read on for a brief summary of their key insights.
Environmental, social and governance concerns
Along with the impact of the COVID-19 pandemic, rising environmental social and governance (ESG) pressures led to lower natural gas & LNG infrastructure investment in North America between 2020 and 2022. Midstream operators, infrastructure investment funds and LNG developers have continually sought to balance ESG requirements with return on investment. However, with spend rebounding as investors refocus on stable returns, industry players have become more aggressive over the past 18 months.
While the focus on ESG won’t disappear, increased natural gas production driven by the ongoing growth in US LNG exports will create the need for large scale investment in both greenfield and brownfield midstream infrastructure. The key question is: will the industry sustain the recent uptick in infrastructure spend, and how will the ESG part of the equation play out?
The rise of US LNG and its impact on gas market dynamics
In less than a decade, the US has become the world’s largest LNG exporter – and increasingly the swing supplier for global markets. But despite the country’s plentiful low-cost resources, several factors prompt questions regarding whether Henry Hub gas prices can be kept relatively low.
While gas production has expanded rapidly, very little storage has been added; rising LNG exports are starting to provide ‘synthetic’ storage – but only at a price. At the same time, power sector dynamics are further reducing gas market flexibility, due to the reduced displacement of coal by gas and increasing renewables penetration. As more of US production becomes tied to global LNG markets, the question becomes, where are the domestic opportunities for gas?
A growing focus on LNG value chain emissions
With ambitious government goals driving tightening regulation in Australia, the US and the European Union, attention on emissions in the LNG value chain has returned. Current EU regulations are focused on measuring and reporting methane emissions, but a future tax on methane emissions for LNG imports can’t be ruled out – or even a carbon tax on them.
Taxes on LNG emissions could reshape LNG trade flows and impact prices; they will certainly force industry players to reevaluate their strategies. Lower-carbon suppliers will clearly benefit from a tax on emissions, as they will be able to target premium markets. Higher prices in premium markets could also convince some suppliers to reduce their emissions footprint, while others might choose to target non-taxed markets instead. However, as demand in these premium markets declines, so will the motivation to offer a cleaner product.
High carbon taxes and broader scope are needed to decarbonise LNG at scale. An EU methane tax could be enough to encourage methane emissions reduction, but an import tax of USD 100 per tonne of carbon dioxide equivalent (/t CO2e) will not be enough to tackle all emissions from LNG imports. For LNG projects already under development to decarbonise, a carbon price closer to USD 200/t CO2e across a much wider geographical area would be needed.
The most likely outcome, however, may be a two-tier LNG market, with Europe and Northeast Asia likely to accept higher prices while the rest of the world – especially price-sensitive Asian buyers – remain reluctant to follow suit.
Don’t forget to fill out the form at the top of the page to download the presentations, which offer more detailed analysis of the outlook for gas and LNG as the world decarbonises its energy systems over the next decade.