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Declining natural gas prices and environmental concerns mean we could witness increased competition between coal, fuel oil, and natural gas as the primary fuel choice for power generation. Although still more expensive than coal and oil, natural gas combustion creates less greenhouse gas emissions and emits less sulfur than either coal or fuel oil, so is generally considered to be more environmentally acceptable. Natural gas-fueled plants can also be operated with more generation flexibility than either coal or oil-fueled plants, which make them better suited to meet peak demand and/or pick up the shortfall from renewable power generation when the sun isn’t shining and/or the wind isn’t blowing.
For the above reasons and more, according to a recent report prepared by ExxonMobil, global demand for natural gas is expected to double by 2040, more than for any other kind of fuel.
This is likely to have favorable impact on the midstream oil & gas sector, particularly on the segment that supports the extensive and capital-intensive LNG supply chain, which encompasses natural gas processing, pipelines, tank farms, LNG liquefaction/shipping terminals, LNG carriers, and, finally, LNG re-gas/receiving/distribution terminals.
In particular, large, seaborne LNG carriers, which provide a relatively economical solution for transporting natural gas in highly compressed liquefied form across oceans, should experience strong business tailwinds following several years of extreme instability.
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Keywords: LNG Carriers, Carbon Emissions, Oil Prices, Climate Change, Floating Liquified Natural Gas (FLNG), Oversupply, ARC Advisory Group.