The ‘Business Case’ for Canadian LNG – Part 1
April 15, 2024
Natural gas power generation has a significantly lower CO2 emissions intensity than coal-fired power. Further, Canada also has lower ambient temperatures than most other LNG producing jurisdictions resulting in much lower CO2 emissions intensity than competing LNG projects in Australia, the US Gulf Coast (USGC) and Qatar. Incorrys analyzed LNG Canada’s 3.2 Bcf/d of gas exports, and their net impact on global GHG emissions, if used to displace coal-fired power generation in Asia (“displacing heavier hydrocarbons” as Minister Wilkinson suggests). For the LNG Canada project alone, which is due to come online in 2025, Incorrys forecasts a minimum* net reduction in global GHG emissions of 75 mtpa of CO2e.
Copper for BEV Batteries 2010-2030
March 26, 2024
Copper, a symbolic metal with a rich history, is becoming a key player in the modern era of electric vehicles (EVs), where clean energy and sustainability play a crucial role. EVs, aimed at reducing carbon emissions and utilizing energy efficiently, are creating a new demand for copper, especially in the electrical systems of transportation. Incorrys believes that there will be sufficient copper supply to 2030 to satisfy demand for electrical vehicles worldwide. However, there is a significant longer-term uncertainty on copper supply for the burgeoning electric vehicle market; partly due to demand requirements from the other sectors, but also the potential impacts given the politically instability in several large, copper producing regions.
Coal Power Capacity Forecast 2022-2030
March 14, 2024
Coal-fired power generation is by far the largest source of electricity generation worldwide unfortunately, it is also the largest greenhouse gas emitter, both overall and on a TWh basis. Unfortunately, as western industrialized countries reduce their use of coal in power generation, some regions, specifically China and India, continue to increase capacity such that they are partially offsetting global efforts to reduce the use of coal and associated carbon emissions. Incorrys forecasts a slight increase in global coal generating capacity through 2030 of about 10% in total, from 2250 GW in 2022 to almost 2500 GW in 2030, most of which is expected to occur by 2025 as many projects in China are currently under construction.
Will Coastal GasLink Natural Gas Pipeline be Expanded?
February 22, 2024
Coastal GasLink (CGL) is a natural gas pipeline project in Canada transporting natural gas from the Montney gas play in northeastern British Columbia to the LNG Canada export facility near Kitimat on the coast of British Columbia. The CGL provides natural gas feedstock to LNG Canada’s liquefied natural gas export terminal, with capacity adequate for two phases of development, consisting of two 900 MMcf/d liquefaction trains in each phase. With the cost to build CGL more than doubling from an initial estimate of Cdn$6.6 billion, Incorrys provides a forecast of CGL pipeline tolls at various cost and throughput levels using our proprietary pipeline tolling model.
United States LNG Approval Pause
February 16, 2024
On January 26, 2024, the Biden Administration announced a pause on pending decisions for permits to export liquified natural gas (LNG) to non free trade countries. The pause is intended to give the U.S. Department of Energy (DOE) an opportunity to update the underlying analyses of economic, environmental, and national security considerations. Incorrys believes commercial parties risking capital are best placed to assess markets and allocate resources to highest returning investments. The announced U.S. LNG Approvals pause may make for good politics during the current election cycle, but with no practical impact.
Global Refined Lithium Production and Forecast
February 1, 2024
The booming electric vehicle (EV) industry has sparked concerns about whether lithium production can keep up with the escalating demand. Incorrys is forecasting supply to increase over 10% to 145,000 tonnes in 2023 indicating industry efforts to meet the mounting demand. Incorrys expects that by 2030, the supply of lithium will nearly triple to almost 360,000 tonnes.
Hydropower Capacity Forecast 2022-2030
January 24, 2024
Hydropower is one of the oldest, largest, and most reliable sources of renewable energy and is larger than all other renewables combined (wind, solar, bioenergy and geothermal), although it is losing market share as growth in wind and solar generation expands. Annual growth of hydropower capacity is expected to be rather moderate at about 2% (30-40GW) annually growing from about 1400 GW in 2022 to over 1600 GW by 2030.
Global Liquefaction Capacity Growth 2022-28
January 9, 2024
The global Liquified Natural Gas (LNG) market experienced a turbulent year in 2022. The market upheaval caused by the Russia/Ukraine conflict has stimulated significant interest in liquefaction and regasification facilities as markets seek to re-establish energy security priorities. In total, global liquefaction capacity is expected to reach almost 685 mtpa (about 90 Bcf/d of natural gas) in 2028, up over 200 mtpa (~40%) from the 475 mtpa recorded in 2022.
Biogas Power Capacity Forecast 2022-2030
September 26, 2023
Biogas is a gaseous renewable energy source produced from raw materials such as agricultural waste, manure, municipal waste, plant material. Biomethane, on the other hand, is upgraded biogas to near pure methane. Combined, these two renewable energy sources only account for about 5% of the total bioenergy market and well under 1% of global primary energy. However, biogas use for electric generation has grown significantly over the past dozen years in many countries, including Germany, China, and India, from under 10 GW of capacity in 2010 to 25 GW last year.
Wind Power Capacity Forecast 2022-2030
August 16, 2023
Growth in wind power generation, like solar, is being driven by climate change and the need to reduce greenhouse gas emissions. The wind industry has grown significantly since 2010 and, although that growth slowed over the past couple of years due to the challenging economic environment and global supply chain disruptions, it is expected to return to a growth pattern as these issues ease. Incorrys expects global wind power capacity will break the 1 TW mark sometime in 2023 and will approach the 2 TW range by 2030.
Solar Power Capacity Forecast 2022-2030
July 10, 2023
Driven primarily by climate change and the push for renewable energy, solar photovoltaics (PV) was a fast-growing market even before recent events that have brought energy security to the forefront. Solar PV capacity increased from just 6 GW in 2008 to almost 1200 GW in 2022. Since 2022, growth in the solar industry has accelerated as countries increase their investments in the industry. Incorrys expects solar capacity to more than triple from about 1200 GW in 2022 to 3800 GW in 2030.
Canadian Renewable Diesel Demand
June 1, 2023
To meet government mandates for lower CI fuels, more renewable diesel will be required to be blended going forward. How much will depend on the overall requirements for diesel, which is a function of overall vehicle stock. Diesel demand in Canada stagnates through the 2020-2035 period as the electric vehicle market cuts into light duty diesel demand. However, diesel vehicles have a specific niche which make them less susceptible to competition from the EV segment. As such, diesel demand will decline at a slower rate than gasoline vehicles.
Canadian Renewable Diesel Feedstock
May 27, 2023
The Canadian Clean Fuel Standard (CFS) is a regulation established by the Canadian government to reduce carbon intensity (CI) within transportation fuels. One of the ways to achieve this CI reduction is through the adoption of renewable diesel. While biodiesel can offer lower CI compared to traditional diesel fuel, its cost-effectiveness depends on factors such as the cost of production, feedstock prices, transportation costs, and tax incentives. Incorrys believes the most important factor is the cost of the feedstock used to produce the biodiesel.
Small Modular Reactors (SMRs)
May 10, 2023
The push to decarbonize global economies and boost energy independence has resulted in renewed interest in nuclear power generation, which has led to the development of new technologies in the nuclear power industry; most notably, Small Modular Reactors (SMRs). The potential advantages of SMRs over traditional nuclear facilities are numerous however, the magnitude of these benefits has yet to be proven due to the lack of development to date. Incorrys expects total SMR annual capacity additions will total over 2100 MW by 2030.
Semiconductor Chip Shortage: Impact on Electric Vehicles
March 24, 2023
Since the first half of 2020, the auto industry has been facing a systematic decline in production primarily due to the Covid-19 pandemic that heavily impacted manufacturing for a long while and has since contributed to supply chain disruptions of most items, including auto parts. One of the casualties of this has been the crisis in the semiconductor industry, not only from manufacturing and supply chain disruptions, but also stiff competition from home computers as more and more people began working from home. Semiconductor chip usage is 10 times greater in EVs than in gas powered cars (3000 chips\vehicle vs. 300 chips in a gas powered vehicle like the Ford Focus).
Battery Electric Vehicles (BEV) Retail Price Trend
February 22, 2023
The 2023 estimated average price of currently available vehicles is USD $72,600 (excluding some of the very expensive models); this compares to Incorrys 2021 estimated average price of USD $70,360. Prices of BEVs, adjusted for inflation, have remained relatively flat over the last 3 years despite efforts to reduce the cost of batteries (the most expensive component of the electric vehicle). The global car industry is still in the process of transitioning toward EVs which is expected to take at least another 5-7 years. However, the price of EVs relative to those of gasoline vehicles are expected to decrease after 2024-2025, while battery capacity will continue to grow. Overall, customers now have a greater variety of BEV models to choose from ranging from more affordable to luxury.
How Russian Oil Revenue Affects the Russian Federal Budget
December 15, 2022
The Russian budget depends very heavily on revenue from the energy sector; particularly from oil and gas. Of the total 2023 Russian federal budget revenue of 26 trillion rubles, 34% is expected to come from the energy sector. The Russian deficit, according to their 2023 budget, is expected to be around 3 trillion rubles – an optimistic scenario. The budget deficit will be financed from the both the National Wealth Fund, which was 9-10 trillion rubles at the end of 2022, as well as borrowing on the domestic market. Although the National Wealth Fund will be sufficient to finance the Russian economy and war efforts in 2023, and perhaps longer, the financial stability of Russia remains uncertain.
Russian Oil Production Forecast
December 15, 2022
Incorrys expects limited decline in Russian supply in next 1 – 1.5 years and Russia will remain one of worlds largest oil exporters. Due to the financial issues facing Russia (from sanctions, the cost of the war on Ukraine and inability to access capital in western markets) coupled with the lack of new western technologies, Incorrys expects Russian oil production will decrease significantly over the coming years as little to no new development is expected to occur.
What is the Cost of Russian Oil?
October 27, 2022
The cost of Russian oil in USD/Bbl for 2012, H1, 2022, and H2, 2022. Since Russia’s costs are not on a ‘full cycle’ cost basis like North America, Incorrys calculated an equivalent 2021 cost of the US Permian Basin for comparison. The total cost of Russian oil reaches USD $40-45/Bbl in 2021 including the cost for development of new fields however, as most new fields are located in remote areas of Siberia, they require significant infrastructure investment. The total cost of oil in Russia without new field development is comparable to costs in the Permian and other US Tight Oil basins.
Russian Oil Production Basins
October 25, 2022
Russia primarily produces conventional oil but also has a very large resource of Tight Oil although there currently is no active exploration. The largest oil producing region in Western Siberia which accounts for over half of Russian oil production. The largest potential Tight Oil formation is the Bazhenov Formation, which covers most of Western Siberia, although Incorrys believes that development of Bazhenov Shale will not proceed in the near future due to the high cost and lack of technology in Russia.
October 11, 2022
Russian Oil Resources
Incorrys believes that without western oil producers and oilfield service companies, Russia will not be able to increase their reserves base, maintain production, or reduce costs as most new fields require the latest technology to explore, develop and produce. While production from older fields will decline at a rate of up to 40%, technology Russia had previously acquired will work for a short while. However, as the drilling of new wells is always required to maintain or grow supply, a drop in production due to aging technological is expected to occur this year.
Tanker Fleet to Redirect Russian Oil from Europe to Asia
October 8, 2022
There are over 2,000 oil tanker ships worldwide of the Very Large Crude Carriers (VLCC), Aframax and Suezmax classes. By comparison, Russia’s Sovcomflot fleet only consists of about 60 of the same class of vessels with an additional 60 ships designed to transport refined products and to shuttle crude oil from offshore platforms to the coast. If sanctioned Russian oil needs to be redirected to Asia (primarily India and China) there will be a need for an additional 120 vessels of varying sizes, including VLCC.
Shipping Russian Oil
October 7, 2022
Russia exports crude oil from four main areas: the Baltic Sea, Black Sea, Pacific Coast and the Arctic. Russia has approximately 64 oil terminals although only a few of them are considered large export facilities. Shortly after European oil sanctions take effect by the end 2022, Russia would have to redirect marine traffic away from Europe to Asia, primarily. Discusses shipping transit times, tanker rates, and additional transportation costs to India and China for oil diverted from Europe.
Price Cap for Russian Oil
October 6, 2022
While the G7 and EU have agreed to impose a price cap on Russian oil (applied to the maritime transportation), they are still discussing some of the implementation aspects. The actual price cap itself has yet to be defined but is expected to be $40-$60/Bbl with the goal to reduce funds flowing to Russia. Currently, 60% of the Russian government’s income comes from the sale of oil and gas. Incorrys examines the impact of the price cap on Russian oil and discusses the pros and cons of the cap.
Western Canada Propane Forecast to 2030
July 5, 2022
Within Western Canada, propane demand has historically been dominated by conventional industrial heating, crop drying, and for oil and gas enhanced recoveries through miscible flooding, solvent injection, or fracking. The growth in liquids-rich natural gas supply throughout North America has resulted in an increase in North American propane supply in excess of domestic demand. This situation is even more pronounced in Western Canada where the oversupply is expected to continue past 2030.
How Russian Oil Revenue Will Decline
May 12, 2022
The price differential between Brent and the Russian oil benchmark of Urals from January 2020 through March 2022 has widened considerably since Russia invaded the Ukraine in February. The widening of the Brent-Urals oil price spread occurred as sanctions against the Russian economy were enacted, although most countries have not imposed an immediate full embargo on Russian oil.
Energy East Pipeline
April 19, 2022
Canada Can Supply More Oil to Global Markets in Medium Term
As the Russian invasion of Ukraine continues, the rest of the world has begun to scramble for Btus in every form – Crude, Natural Gas, Renewable sources. The environmental file is quickly heading to the backburner as countries realize the economic and geopolitical imperative to energy security and the importance of strong allies with control of energy.
World LNG Liquefaction Capacity Growth by Project
April 11, 2022
LNG imports to Europe is one of the supply sources intended to replace natural has from Russia. In 2010 Europe received 10 Bcf/d of LNG. The US Government plans to deliver to Europe an additional 15 Bcm (1.5 Bcf/d) of LNG by the end of 2022 and increase deliveries by 5 Bcm (0.5 bcf/d) each following year by rerouting LNG exports from other countries, primarily Asia.
European LNG Imports
April 11, 2022
Europe currently has 37 LNG regasification terminals, of which 26 are located in EU member states. Between January 2021 and January 2022 only 40% of these terminals’ capacities were used however, utilization increased to almost 100% during the winter of 2021. This means that existing capacity will not be able to handle a large number of additional cargoes.
African Gas Supply to Europe
April 11, 2022
Incorrys estimates that although Africa can provide only a modest increase of gas exports to Europe in 2022-2023, African gas supply can grow in the next 3-6 years. Algeria is the 10th-largest gas producer globally. However, Algeria gas reserves and exports are declining. Algeria exports in 2020 were 3.8 Bcf/d; down from 5.2 Bcf/d in 2016-2017.