There are many uses for natural gas – including generating energy, storing renewable energies and green mobility – making it an essential element for achieving the energy transition, as Didier Holleaux, Executive Vice President of ENGIE, explains in an interview published in the magazine Pétrole et Gaz Informations on June 1, 2017.

Extracts from an article published on June 1, 2017, on Pétrole et Gaz Informations

Didier Holleaux

Pétrole et Gaz Informations: In the light of factors such as Brexit, the agreement of OPEC and non-OPEC countries to reduce oil production and the change of government in the United States, how do you judge the context of the natural gas market?

Didier Holleaux: We expect Brexit to have quite a minor impact on the Group’s activities, including on our gas business. However, the situation in the United States is creating uncertainty. Remember that the country had put an embargo on oil exports with the aim of reserving its production for the domestic market and thus trying to lower the price of this energy in the United States. Our baseline scenario anticipates significant American exports of Liquefied Natural Gas (LNG), but all the same I do not believe that we are shielded today from a protectionist reflex which might one day restrict U.S. gas exports, under pressure from American industry. The current period of overproduction is leading to relatively low prices pretty much throughout the world. This situation will not change in the very short term, but should rebalance naturally in the first half of the 2020s. The key question is how fast the substitution of coal by gas will occur in a certain number of countries. The fastest way of reducing global CO2 emissions is to replace much of the coal-generated electricity production by gas-generated production. And depending on the pace at which this happens, the rebalancing of the gas market will occur sooner or later.

According to a study carried out by Cedigaz, growth of the natural gas market over the next five years is forecast at between 1% and 1.5% per year. What are the potential growth areas and for what uses?

On this subject, we agree on the relatively convergent scenarios of IFPEN, IEA and, indeed,  Cedigaz. Growth in gas consumption will occur primarily in non-OECD countries, while demand will tend to remain stagnant in OECD countries, except in the United States and Canada where it will continue to grow. At a worldwide level, the growth potential for gas is based on the substitution of coal in power generation and new uses, such as retail LNG or LNG for vehicles. Here we see a renewed potential in terms of reducing carbon emissions. China retains its potential because even with lower growth, it needs to substitute coal with natural gas even if only for reasons of improving air quality. In India, this substitution will only occur if the price of gas is competitive. Additionally, other countries such as Brazil have very substantial energy needs. In Europe, finally, growth will be quite modest, since energy efficiency efforts are continuing everywhere, and they will lead to a situation of very weak growth or a decrease in the demand for energy. in Europe, growth will be modest because all the energy efficiency efforts are continuing and will lead to a situation of very low growth or decrease in energy demand. But the extremely important point is that, whether at European or global level, there is no scenario compatible with maintaining global warming at below 2° C which does not make a very considerable use of natural gas and progressively biomethane, for at least the next thirty years. […]

Market players present a combination of natural gas and renewable energies as the best “ally” of the energy transition. But given the lower costs we are seeing for certain renewable energies, won’t these energies end up competing with natural gas?

In our view, for at least the next three decades, gas and renewable energies will be complementing each other rather than competing with each other. With the exception of geothermal energy, which tends to be available continuously, and hydroelectricity, which can be used for high peak demand, the production of renewable energies is quite strongly unrelated to demand. So there are supplementary production needs in order to cope with peaks in consumption. From this perspective, CCG [combined cycle gas – ed.] power plants are the best for complementing the intermittent nature of renewable energies. In the short term, storage will depend less and less on technical issues but will be more and more a question of cost. Storage in battery form is suitable for storages of very short duration and storage in the form of hydrogen, which we believe in fundamentally as a medium- and long-term solution, is still rather complex to implement. As far as storing electricity in the form of (synthetic) methane – power to gas – is concerned, GRTgaz is testing the concept, in particular on a demonstrator with RTE that is examining its technical and economic performance. Another project, in Dunkirk, in intended to test the mixture of hydrogen and natural gas in real-world conditions.

A year ago, you announced plans for investing €100 million by 2020 in LNG and CNG filling stations in Europe for trucks. How much progress have you made?

We already have approximately 150 NGV stations in Europe and our subsidiary, GNVERT, recently announced that it alone will be rolling out a further 21 stations in France in 2017. We think we will have reached 170 stations in Europe by the end of next year. […] As far as LNG stations are concerned, we are hoping to create nine in France by the end of 2018. The day when heavy trucks can cross Europe fueled by LNG exclusively is not very far away. Some truck manufacturers are making efforts to offer adapted vehicles, especially as an increasing number of cities are demanding that the heavy goods vehicles that cross them use clean fuels.

What are ENGIE’s ambitions with respect to LNG bunkering for ships and what are the obstacles to the development of this market?

We are seeing this market emerge. Political signals showing that leaders of countries are sensitive to this and that they really have the ambition to see their fleet convert to LNG would be very helpful. Private initiatives have been taken. Our Group is heavily committed, with the launch of the Gas4Sea brand name and the construction of the ENGIE Zeebrugge tanker (capacity 5,000 m3). Some of our competitors are taking similar positions. However, most ship-owners and shippers will still be reluctant as they will not be sure of the availability of LNG in every port of call on acceptable economic conditions. […]