Charterers drive LNG’s own transition journey


Some of the world’s largest gas producers are behind moves to cut greenhouse gas emissions along every link in the LNG supply chain – from well to consumer. They are also supporting initiatives that could see every LNG cargo consignment assigned not only a calorific content but also a label, detailing its emissions footprint.

Carbon is a major contributor to the world’s accelerating climate emergency. But methane is a far greater challenge. As a greenhouse gas (GHG), methane can be approximately 30 to 90 times more dangerous than CO2. 

Proactive LNG traders and producers including Houston-based Cheniere, Trafigura in Geneva, and Singapore’s Pavillion Energy are offsetting cargoes based on the Life Cycle Analysis of their gas production and supply chains. Eventually, it is quite possible that the entire gas supply chain could become carbon-neutral. 

However, we lack the accurate monitoring, reporting and verification (MRV) systems that are needed for this immensely complex task. Some experts even question whether an accurate and reliable MRV setup across every link in the production and supply network is even possible. 

Calculating GHG impact

Tracking methane under certain conditions is not that difficult – elements of this can be tackled relatively easily using available technology. However, monitoring and measuring the exact volume of methane emissions over the entire supply chain is tricky. Yet this information is essential if we are to calculate the carbon intensity and GHG impact of a specific product or cargo.

In shipping circles, we consider unburnt methane in ships’ engines to be a major concern. Engine designers and combustion experts are making great progress in reducing methane slip. Of course, we must not be complacent – the end objective is to eliminate methane slip entirely. 

The process is well under way – in fact, methane slip can be offset with current technologies and certain combustion systems. Two-stroke, high-pressure, diesel-technology engines, combined with power take-off arrangements such as shaft generators, go a long way towards solving the problem. But other systems are under development that will tackle methane slip in existing engines as well as other engine combustion arrangements.

LR is involved in various slip-related initiatives. We are collaborating with others on a joint project aiming at zero methane emissions onboard ships. We are also working on a proposal for the funded development and full-scale proof of concept of technology specifically tackling the shipboard methane issue.

However, shipping’s contribution to methane emissions is a tiny fraction of one per cent. In fact, the International Energy Agency (IEA) estimates that only 13 per cent of methane emissions come from the entire gas production process, including shipping and distribution. The remaining 87 per cent of emissions are generated by the agriculture and waste sectors in particular. 

Capturing emission benefits

The first of the many opportunities is bio-LNG, natural gas that is feedstock-agnostic and can be produced from biomass created in agriculture or waste that is not part of the food chain. Therefore, the methane that would have been emitted in raw form to the earth’s atmosphere is captured and used by the world’s gas sector as fuel.

There are many potential uses for this energy, but an obvious one is in the development of new fuels which the world needs on its decarbonisation journey. These include ‘blue’ ammonia and ‘blue’ hydrogen, chemicals that are created by the steam methane reforming process and subsequent carbon capture and storage. 

Studies indicate that bio-LNG would be substantially cheaper than green or e-LNG. According to some estimates, e-LNG would cost about $1,800 per tonne; bio-LNG could be available at less than $1,200 a tonne, including liquefaction costs. Initially, these figures look eye-watering, but the cost of other zero-carbon fuels is likely to be significantly higher, and as yet, there is no global infrastructure available for those fuels of the future. 

Which type of greener LNG will gain the most momentum is unclear. But the drive to focus on supply chain emissions is evident.

Industry-led initiatives

Back in March, Trafigura took delivery of the first cargo of carbon offset condensate from Woodside, loaded at Pluto LNG is Western Australia. The CO2 emissions resulting from extraction, storage, and shipping, of the 650,000-barrel cargo were calculated by Woodside and Trafigura, and then offset through efficiency measures and validated carbon offsets. 

In April, Pavillion Energy Singapore said it had imported the city state’s first carbon-neutral cargo of LNG, based on agreements with suppliers to provide a statement of GHG emissions from well to discharge port.

Pavillion said in a statement that carbon emissions associated with the LNG cargo from well to tank, including extraction, production, transportation, and regasification, would be offset. The company explained that Carbon credits used for the offset were from validated forestation projects in Peru and China.

Meanwhile, Cheniere Energy Inc. announced in June that it will quantify carbon emissions from suppliers and production sites, and provide the information to customers. The company already has agreements in place with five natural gas producers and several academic institutions to set up MRV systems for GHG emissions. It plans to provide customers with cargo emission labels in the near future.

There is no escaping the fact that tackling GHG emissions from well-to-wake or from well-to-consumer is immensely complicated. However, the application of green liquefaction could raise LNG’s existing GHG saving of 20 per cent (relative to conventional fuels) to about 32 per cent. 

Moreover, GHG emissions is not an issue that is being left for regulators to sort out. LR is engaging with several energy stakeholders to assist them in the setting up of MRV systems for their gas supply chains and the GHG footprint certification of cargoes.