Stewart, you should be running the country!
Extremely well argued and cogent case.
Back in the seventies, as Bass straight oil was coming on line, we built a refinery at Altona.
Now, Australian sweet light crude, traditionally leaves the ground as a very nearly ready to use, naturally occurring sulphur free diesel, needing only a little insitu chill filtering, to produce a superior than refined diesel product; meaning, it was worth considerably more as an exported product.
The oil companies shipped it out and returned with sulphur laden sludge; or the sulphur laden waste of Middle East refineries.
The then state of the art Altona refinery turned it into diesel and petrol etc.
The name of the game for an industry turning over in excess of four trillions annually, is maximised profits.
They earned a very handsome return shipping it out and shipping it in, in their tankers, and added exponentially to the price, we gullible fools, pay at the bowsers.
LNG is just another example of oil companies maximising their returns, at our expense, and to hell with the environmental consequences. And all approved, it would seem, by the current/former minister?
Could it be that we are witnessing the end result of the most inept, incompetent, gullible, obtuse management model, or is there something else at play here; given the result?
It is possible to pass NG through a catalyst, which knocks off a few collectable hydrogen atoms, to produce liquid methanol. A very useful substitute for petrol, avgas etc.
And shipping methanol, is no more difficult or costly or high tech, than shipping petrol; albeit, slightly less dangerous.
Moreover, the economic benefit accruing to us from offshore LNG sales, pale into insignificance, when compared to what we could achieve, if we simply used this resource as lower carbon, lower cost to us, revitalisation of our manufacturing base.
Surprisingly, we might even find, with the help of some innovative high tech solutions, we could more than compete with places like China, which is currently experiencing a 20% per, wages inflation!
Rhrosty.

I question whether foreigners should have first dibs on our gas. We've seen Japan consume a third of world LNG post Fukushima. They even have a Norwegian LNG tanker sailing the now navigable Arctic shortcut. I'm surprised they allowed a nuclear powered Russian icebreaker to lead the way; perhaps the gas will be radioactive by the time it arrives.

If I recall gas burned in Australia to power compressors for LNG export is 65% exempt from carbon tax. The architect of that idea is now in the entertainment industry. I'm not sure if this exemption will apply to floating plants like the supership proposed by Shell.

In the Whitlam era Rex Connor wanted a pipeline from west to east, an idea that ended in disaster. In 20 years or so I can picture Adelaide, Melbourne and Hobart getting LNG shipments from WA, having depleted their local piped gas. First of all why don't we work out how much gas we really have? Will fracking be a bubble? That's gas for power stations, chemical feedstock, heating and perhaps future transport fuel. Then work out how much we can export. By 2030 or so I guess not much.

I have no comment to make about the author's main argument. If carbon pricing makes LNG more expensive than coal (actually, I thought it was more expensive to begin with) then that it was the policy was designed to do.

However, I did not see a reference to the high Aussie dollar, which is causing real problems throughout the economy at the mo. Although there could be less duplication in green tape, and more flexible labor regulations, the high dollar is a lot of the local expense of collecting and shipping the stuff.

Unfortunately the author spoils his analysis by then making an absurd comment that renewables will take over from fossil fuels. They will not. At the moment they account for 3 per cent of electricity generation on the Eastern grid (albeit much higher levels in SA), and a tiny proportion of fuel consumption and there are REAL problems in expanding that share, even to meet government regulations. There is also the question of whether they make any difference at all on an isolated grid.

If the author wants to be taken seriously then he should climb down our of his green cloud, or ivory tower or where ever he is engaged in these total fantasies and see the world for what it is.

Stewart is adept at promoting his self-interest as Australia's interest, but his arguments don't stand scrutiny. He says:

“LNG requires compressing feedstock natural gas 600 times so it can be shipped to in special, single-purpose tankers for decompression and pipeline delivery at the far end. All this is energy intensive. This creates greenhouse gases -- lots of them”

LNG is not “compressed 600 times”. The reduction in volume is achieved mainly by cooling. Gas is stored and transported at atmospheric pressure. A small amount of gas is used to achieve liquefaction, a small amount of boil off gas is used to power the ships that take LNG to market (or reinjected), and regasification may or may not use a bit more, depending on the method used (most commonly sea water is pumped over the pipes to raise the temperature). The proportions of total LNG used, and the emissions it generates, are likewise small.

Which US researchers find that lifetime emissions are higher that coal? This seems unlikely to me. As coal emits about twice as much CO2-e as LNG to generate the same amount of energy, this argument implies that either half of LNG is lost in the liquefaction/regasification process (it’s way less than this) or LNG infrastructure and energy generation infrastructure is more emission-intensive to produce by many orders of magnitude. High levels of fugitive emissions might account for relatively high emissions in the USA, where much gas production is unconventional and gas is piped, but there’s no reason to expect the same in Australia. And Gorgon, Australia’s biggest LNG project, is geo-sequestering its CO2.

@ Rhian:
I cry BS.
LNG is indeed stored and transported under pressure.
Where did you ever get the idea that natural gas is at atmospheric pressure from? You are wrong.

Taswegian is an optimist.

Proven and probable resources of gas in Australia's south east (Vic and SA) are equal to about ten years' production at current rates. There is no chance that Bass Strait gas will still be around in 20 years' time.

Johnbennetts
I gtet the idea from the gas companies. Check this:
http://www.qgc.com.au/media/100587/13--shipping1.pdf

or this:
http://www.glng.com.au/Content.aspx?p=110

LNG tankers are big, sophisticated eskies, relying mainly on insulation to keep LNG liquid. The liquid is actually at a slow boil, with the boil-off gas used to either power the ship or re-liquified, but it does not rely on pressure to sustain it as a liquid.

The pipeline option is also fraight with problems. A single pipeline to a single market might conceivably represent a cheaper way to transport gas than an LNG project – though I doubt it. But several factors suggest to me pipelines are not a good option for Australia’s gas exports.

We don't have a single source of LNG, we source it from WA, Qld and the NT. And We don’t have a single market for LNG, we sell it to Japan, China and Korea. Future markets could include India, the smaller south-east Asian countries, or indeed anywhere in the world with a regasification terminal (we even had discussions with California before the USA developed its unconventional gas industry). Pipelines will never have the flexibility that shipping has to meet new, variable and unexpected demand.

We don’t know how much gas we have, nor what future demand will be. While onshore pipelines can expand capacity fairly easily through looping, compression, etc, this is not true for underwater pipes – especially in deep water. Piping gas will not allow us to expand supply to meet demand as readily as shipping it.

If we own the infrastructure and it is in our territory, we can control it. Sovereign risk multiplies rapidly when infrastructure crosses the borders of unfriendly neighbours. One reason Europe is interested in importing LNG despite its higher cost is to reduce reliance on gas piped from Russia through the Ukraine.

And I think it unlikely we’ll ever pipe biofuels to Japan

Oh – and another factual error. Australia’s GDP in 2011-12 was 1,473 billion, so $160 billion of LNG investment is equivalent of 10.8% of GDP, not 16%.
http://www.abs.gov.au/AUSSTATS/abs@.nsf/DetailsPage/5204.02011-12?OpenDocument

JohnBennetts

This comment is simply absurd. "Proven and probable resources of gas in Australia's south east (Vic and SA) are equal to about ten years' production at current rates."

You really need to check up on this stuff. If you look again you'll find that if the figure is true it is relevant to existing, conventional reservoirs and not shale and does not allow for new discoveries.. If you went back 10 years you may find they had the same figure for reserves. Then if you look through the literature you'll realise that the reserve figure is a function of price and availability of alternate sources and a couple of other factors such as technology - it has nothing to do with any actual limit to the resource in particular areas as such.

So the seeming rise and rise of Coal Seam Gas industry outside Vic and SA, would affect the search for new basins in those states - why look for the stuff if the CSG segment is producing the stuff by the ship load? The reserve figure by itself for a certain area is completely meaningless.

I have done some Googling on the claim that lifetime GHG emissions for LNG are not better than coal. Most analysis I have found doesn’t support that conclusion. More importantly for Stewart’s argument, the studies that find LNG no better than coal do so primarily on the basis of fugitive emissions. Burning gas to generate energy release much less CO2 than burning coal, but if gas production results in significant releases of methane (a far more potent GHG than CO2), then LNG’s advantage over coal diminishes and might even disappear.

Leaving aside for now the plausibility of this argument, it means Stewart cannot use the emissions intensity of LNG compared to coal to support his case. As most fugitive emissions occur in the production phase, and the transportation phase contributes very little to fugitive emissions, it follows that fugitive emissions will be equally problematic for gas transported by pipeline as for gas transported by LNG tanker.

So to parse Stewart’s argument:

1) LNG is liquefied mainly by compression and transported under pressure – wrong
2) This compression process requires very large amounts of energy - wrong
3) LNG’s emission’s profile is no better than coal – probably wrong
4) This is because of the energy needed to compress and pressurise the gas - wrong
5) Gas transported by pipeline will be much more greenhouse friendly than LNG – wrong
6) Therefore we should invest tens of billions in pipelines - ?

This GHD study provides a useful summary of emissions in LNG production. It suggests about 12% of CO2-e occurs in processing, transport and regasification. Of course, there would also be significant emissions in transporting gas thousans of km by pipeline.

http://www.communityovermining.org/appea_worley_csg_greenhouse_emissions_study_final.pdf

@ Rhian:
LNG means liquified natural gas.

We are not discussing CNG. We, including you, are considering LNG.

It is a liquid, which may or may not be at very low temperatures and thus reduced pressure - but it is still under pressure, way above atmospheric.

As heat is carried through the walls of the container, the liquid gas tends to boil/evaporate, which absorbs the latent heat of vaporization.

This vapour is typically bled off over time and captured and used as fuel (eg in the ships which carry LNG) or it is flared or simply vented. Flaring is preferable to venting because it reduces the GHG impact of the vapour. Some of the embodied CO2 may be injected back into the strata from which the gas originated, but this costs even more energy loss. No CO2 from CSG is currently being re-injected.

Now, to Rhian's point #1: Still wrong. LNG is, by definition, a liquid. Originally a gas, it is liquified by refrigeration, which involves pressurization, and stored as a liquid, typically under ambient temperature and high pressure or lower temperature and thus lower pressure.

#2. I reaffirm that refrigeration, including the necessary compression phases, involves very significant energy costs.

The reference document which is claimed to originate with GHD actually comes from Worley Parsons. Make your mind up. Besides which, from an initial perusal of the document, it appears that this report ignores the CO2 content of natural gas and CSG and commences analysis only after separation and venting or CCS of the CO2 fraction.

Further, its primary recommendations are made on the assumption that the LNG/CSG is used in a CCGT, which is far from the universal case. Primary comparisons with coal use subcritical technology, thus the best LNG case has been compared with the worst case for coal. Has the data been cherry-picked to serve the interests of the client, APPEA?

@ Curmudgeon:

What a waste of time it is reading some comments!

If the industry uses certain language to describe its known and probable reserves and the numbers so derived are reported by Commonwealth regulators, then that is good enough for me.

What language Curmudgeon chooses to use is his business, not mine.

Great comments everybody!

Here's responses:
Rhosty:
yes, I agree there might be some 'upselling' going on in the infrastructure arena that may not be in the long-term best interest of users.
This piece is aimed at challenging this default logic we're fed about LNG being the 'only' way to export gas.

Taswegian:
it's not about 'foreigners' having first dibs on Australia's gas,
it's about progressively INTERCONNECTING regional networks to enable the price mechanism to better arbitrate markets and prices and hence supply and demand and thus lead the 'discovery' process toward the most efficient energy sources.
Yes, interconnected markets would mean that foreigners probably will be willing to pay more for Australia's gas that Austrailans would. If/when this occurred, Adam Smith's 'invisible hand' coupled with David Richardo's theory of 'comparable advantage' would mean Australia is best off exporting its gas to higher paying foreigners and using those remittances to build up other industries -- like knowledge industries.

Curmudgeon:
You should like a troll. You're parroting spoon fed attack lines distributed by the fossil fuel industry. I won't spend much time on you apart from saying that BECAUSE you're right AND renewables will NEVER be competitive against fossil fuels, you should support an integrated network. REASON: it will merely prove the overwhelming price and GHG attractiveness of fossil fuels through the price and trading mechanism. Therefore, because your argument is correct, such a network will MORE DEEPLY entrench fossil fuels. So, thanks for making my argument in favour of a network.

Rhian,
About the 600 times. It looks like Russia's Gazprom, one of the world's largest natural companies, has its facts wrong - see http://www.gazprominfo.com/terms/liquefied-gas/
I'd refer you to them in order to correct their statements. I'll monitor the page above for corrections.
Lifecycle LNG emissions are in research by Jaramillo et at the US Carnegie Mellon University. "Comparative Life Cycle Carbon Emissions of LNG Versus Coal and Gas for
Electricity Generation," Paulina Jaramillo, W. Michael Griffin, H. Scott Matthews
I look forward to reading your challenges to her methodology and conclusions.

Looked as if it might be an interesting article, until the author went off into la la land, with his chatter about wind solar & biofuel. I wonder if he actually believes that rubbish, or puts it in to please the chattering class.

I then see a typical attempt at put down of Curmudgeon's post, when the author had no answer to the logic.

So sorry Stewart, you had better polish up your arguments, such appeals to authority just don't cut it any more. Try to do better next time.

JohnBennets

Yep, I admit the document was by WorleyParsons, not GHD.

If you look again you’ll see it examines the whole production process. I agree a document published by APPEA is only going to reach one conclusion about the relative merits of coal and gas, but its data on emissions at various stages of the LNG production process should be fairly reliable. My point was that, if 12% of emissions occur during liquefaction, transportation and regasification, then the GHG benefits of piping gas rather than shipping it cannot be very large.

We agree boil-off gas is often used to power the ships.

We disagree that LNG is “stored as a liquid, typically under ambient temperature and high pressure”. This is not true.

This is from Chevron’s LNG primer:
"LNG is a cryogenic liquid. The term “cryogenic” means low temperature, generally below -100°F. LNG is clear liquid, with a density of about 45 percent the density of water. The LNG is stored in double-walled tanks at atmospheric pressure. The storage tank is really a tank within a tank that is filled with insulation."
http://www.chevronaustralia.com/Libraries/Chevron_Documents/Factsheet_What_is_LNG_pdf.pdf.sflb.ashx

this is from Wikipedia:
“[LNG] is … condensed into a liquid at close to atmospheric pressure (maximum transport pressure set at around 25 kPa/3.6 psi)”
http://en.wikipedia.org/wiki/Liquefied_natural_gas

This is from the international group of gas importers:
“LPG is stored as a liquid under pressure, whereas LNG is stored as a liquid only at very low temperatures and ambient pressure.”
http://www.giignl.org/fileadmin/user_upload/pdf/LNG_Safety/1-NG_Basics_8.28.09_Final_HQ.pdf

I could go on.

Refrigerant gases are compressed during the refrigeration process, but the LNG itself typically is not in Australian LNG production. The heat exchange process is similar to your refrigerator at home. The contents of your fridge are not under pressure, the gases that cool it are.
http://www.meoaustralia.com.au/content/Document/What%20is%20LNG.pdf

I agree this is quite energy intensive, but nowhere near enough to make LNG lifetime emissions equivalent to coal, as the article implies. And shipping gas several thousand km by subsea pipe is also pretty energy intensive, so Stewart's preferred option yields far less GHG gains than he claims.

Stewart
Gazprom doesn’t have its facts wrong, it’s just that you are interpreting them incorrectly. LNG is indeed 1/600th the volume of gas. But the reduction in volume and liquefaction are achieved primarily by cooling, not by pressurisation. As JohnBennetts and I have debated, LNG is generally produced and stored at about atmospheric pressure.

The paper you cite does not say that LNG and coal have equivalent lifetime emissions. It says that “In the future, as newer generation technologies and CCS are installed, overall emissions from electricity generated with coal and electricity generated with natural gas could be surprisingly similar”. Of course CCS would improve the comparative emissions intensity of coal, but we don’t have it yet on an economical scale for coal-fired electricity generation.

If you look at the actual data in the paper, it supports my position. Comparing the average additional LNG emissions (liquefaction, transport, regasification) in table 4 with the total emissions from piped natural gas in figure 4 yields net additional emissions of about 13% - very close to the WorleyParsons estimate. This is based on the US market. Your preferred option of piping gas to Asia entails much longer transportation distances and the challenges of subsea pipelines in deep waters, so transportation emissions are likely to be far higher than the comparatively short distances, established infrastructure networks and accessible pipelines of the US gas industry.

@ Rhian:

Thank you for those references.

If you are saying that LNG can be stored and transported at -161 degrees C (NB NOT -100 degrees: that is simply the defining characteristic of a cryogenic liquid.) and neglible pressure, then I agree with you. A am surprised that the pressures are as low as cited by Chevron. If storage is at -100 degrees C, as you state, then it will be at very substantial pressure.

The Gorgon project's bumf all but ignores the existence of CO2 in the gas at the well head. I have read that the fraction is of the order of 30% by mass, so the mass of CO2 needing to be dumped or pumped back underground is equal to about half of the mass which is exported by sea. 1 tonne back down the hole for every 2 tonnes shipped.

If the same applies for CSG, for which sequestration is not at all simple, then that is a further argument against this horrible energy source, extraction of which is wrecking property values, lives and towns in the valley in which I live.

Rhian and Stewart

The sea floor between Australia and Asia isn't exactly stable. There are frequent earthquakes throughout the region. I'd imagine that movement between continental plates isn't going to stop any time soon, so the threat of catastrophic damage to undersea pipelines is ever present.

I much prefer a nuclear powered future than to be reliant upon fossil carbon (methane) which is transported at -161 degrees C or piped for thousands of miles. Isn't there enough carbon dioxide in the air already?

JohnBennetts
I never said the LNG was stored at -100 oC. Nor does the Chevron material I quote. The boiling point of methane is -161 oC, and this turns out to be the most efficient temperature at which to store and transport it – at atmospheric pressure, as I have said all along.

The Gorgon project’s gas is high in CO2, but it is required to extract most of that CO2 and geosequester it. I’m not sure how much energy that takes. Anyway, that has little bearing on the article’s main argument, which rests on the difference between LNG and piped natural gas.

I’m more familiar with the WA gas industry so can’t comment on the potential to geosequester coal seam gas, or the CO2 content of Qld gas projects. It strikes me, though, that your objecitons to CSG would apply equally to gas exported by pipeline, as Stewart is advocating.

More great comments!

I'm glad we're getting to the meat of the matter here -- the LIFECYCLE emissions of various energy sources.

It amazes me that the energy industry here in Australia (Woodside's Don Voelte in particular) got away for so long with saying things like LNG is the best default option for Australia because NATURAL GAS burns cleaner than coal -- conveniently leaving out all the other emissions in the LNG production and trasnport chain.

Look at the gas industry's studied syntax and you'll see this particular construction used again and again. This indiciates to me that they get this…and opt for evasion.

Moving on, LNG is a SINGLE-PURPOSE, SINGLE-GENERATION technology.

Gievn that natural gas is a transition fuel to renewables, LNG has technological obsolescence built in. That's no good.

What's needed is an energy distribution network in Asia that can carry the fuels of the future -- like hydrogen, biofuels and even waste carbon.

LNG can't do that. Pipelines can. This inherent flexibility has value. This is being left out of current equations. That's dumb.



The point here is to develop the networks of the future that can adapt. Pipelines MAY cost more to build than LNG. My research indicates they're about the same, based upon comparables.

If this is right, the net present value of pipeline fliexibilty is an IMMENSE additional positive that needs to be taken into consideration. Quantifying this is now the subject of my ongoing research.

About the tectconic argument. The tectonic risk in the Timor and Savu Seas is about 5 on the Richter Scale. That's roughly the same tectonic risk as Bangka Island, located just a few hunded kilomaters south of Singapore where Indonesia plans two build TWO nuclear plants. Enough said.

Apart from the evident trolls, excellent points are being raised all around.

Thanks everybody!

Anyone (apart from the trolls) who'd care for additional bilateral contact can reach me at info@grenatec.com.