Marine Money. London, January The blue revolution A profitable green transformation. Golar LNG Limited

Size: px
Start display at page:

Download "Marine Money. London, January The blue revolution A profitable green transformation. Golar LNG Limited"

Transcription

1 Marine Money The blue revolution A profitable green transformation London, January 2019

2 The world is totally dependent on Hydro Carbons But there are rooms for optimization Global energy consumption, 264m bbl/day Oil-to-gas switch potential, 41m bbl/day LNG is the fastest growing fossil fuel Coal 28% Nuclear 4% Hydro 7% Renewable s 4% Oil 34% Trucks 19 million 41 million bbl/day Power 5 million Rail 2 million Marine 4 million Res/Comm 11 million Expected CAGR ( ) 18.0 % 16.0 % 14.0 % 12.0 % 10.0 % 8.0 % 6.0 % 4.0 % 2.9 % 2.9 % 3.4 % 9.4 % 16.6 % LNG 3% Natural Gas 20% LNG / Natural Gas can replace ~40 million barrels of oil per day Based on significant LNG reserves and forward LNG price, LNG can be delivered at USD 42 boe 2.0 % 0.0 % -2.0 % 0.4 % -0.4 % Coal Oil Hydro Nuclear Natural Gas LNG Renewables LNG can replace ~40% of global oil consumption Source: BP Statistical Review

3 LNG is Cheaper and Cleaner Cheaper (USD/boe) Cleaner USD/boe USD/MWh Source LNG Liquefaction Shipping Regas West Africa LNG (USD/BOE) Cheaper (USD/MWh) US LNG (USD/BOE) Jamaica Guatemala Bahamas Uruguay Chile Costa Rica Colombia Peru Ecuador Honduras Brazil Mexico Tanzania Senegal Kenya Nigeria Ghana South Africa Uganda Cameroon Mozambique Ivory Coast Pakistan China Indonesia Philippines Malaysia Singapore Thailand Vietnam India Bangladesh Sri Lanka Global Average 60 Current brent Compared to Diesel Natural Gas Diesel Residual Fuel Oil Low-Sulphur Coal 400% 350% 300% 250% 200% 150% 50% 0% 73% 108% 130% 450% 1,000% 475% 2,600% 300% 66% 0% 32% CO2 NOx SOx PM10 Source: EIA, IEA LNG with delivered cost of USD 28-42/boe or USD 55/MWh as power 3

4 LNG entrepreneurs changed a nation in 18 months, but we have a long way to go New Fortress, Montego Bay, Jamaica Norsk Hydro s Alunorte refinery LNG industry tried converting Jamaica to LNG for 15 years New Fortress did it in 18 months By converting to LNG Jamaica reduced emissions by 50% and target 30% reduction in Jamaican power prices Savings for Jamaica is expected to be USD 450m/year Jamaica s credit rating upgraded Total Norwegian pure CO2 emissions in 2017 was 43.8 million tons Alunorte is currently fueled by oil and coal, with annual emissions of 4.2 million tons = ~10% of total Norwegian CO2 emissions By switching to LNG power, Hydro could save 1.5 million tons of CO2 = and USD 44m in energy costs per year on current oil price 4

5 Some crazy laggards Permian, Texas, USA but others take action Mendoza, Argentina # of diesel trucks in operation: ~38,000 Annual diesel consumption 1 : ~2.8bn liter LNG flaring in diesel equivalent liters/year: ~4.2bn liter Diesel cost per MMBTU: ~USD 18 LNG fuel costs for trucking per MMBTU: ~USD 5.5 Annual diesel cost 2 : Annual cost of fuel with LNG switch: Annual potential cost saving: ~USD 1.8bn ~USD 0.6bn ~USD 1.2bn 15 January 2019: 6x LNG fueled trucks entered into operation to service the Anchoris Thermoelectric Power Plant, in the Mendoza province, to create a virtual gas pipeline The trucks will be fuelled by Galileo LNG dispensers along the roads The trucks can load up to 265 kilograms of LNG, sufficient for 1,100 kilometers fuel range Fuel saving of ~50% whilst reducing emissions Annual saving in LNG switch per truck 3 : Cost of LNG truck delivered Permian: ~USD 30k ~USD 100k Permian trucking could save 2/3 of fuel costs and 60% of CO2 emissions by switching to LNG 1. Assuming 240,000km per truck per year and diesel consumption of 0.31 liter/km equal to ~204 liters diesel per truck per day 2. Assuming avg, diesel price of USD 2.95/gallon 3. Assuming avg Waha has price of USD 1.9/MMBTU, USD 3.6/MMBTU liquefaction costs, and delivered price for LNG as fuel of USD 5.5/MMBTU Source: Rystad Energy, Goldman Sachs, Bloomberg, Galileo Technologies 5

6 We need to change its under way and it pays off Annual cost saving of oil-to-gas switch of 41m bbl/day Annual cost saving oil-to-gas switch in USDbn USD 263bn annual USD 60/bbl oil There 200 is currently 163x LNG fuelled vessels on the water (excluding LNG carriers) and 159x LNG fueled 117 vessels on order All 100 key shipping segments has seen orders of LNG fueled vessels: Tankers, Bulkers, Containers, Car Carriers, Ro-Ro and Cruise Bellwether 0 shipping names advocate LNG fueled tonnage for future new orders Oil price (USD/bbl)

7 7