Oil companies could be excused for being edgy in the run-up to next week's climate change discussions in Copenhagen. For better or worse, whatever emerges from those talks will have a big effect on their core business of exploiting fossil fuels. That has prompted top decision makers in the industry to gaze long and hard into their crystal balls. What many are seeing is a future swirling in clouds of gas - not the greenhouse variety to be the subject of heated debate in the chilly northern capital, but natural gas.
That vision has already prompted the construction, on the dusty headland of Ras Laffan in Qatar, of several marvels of 21st century engineering. Not nearly as well visited or photographed as Dubai's famous skyscrapers less than an hour's flight away, this concentration of massive gas processing facilities is just as fantastic in its way, and could have a greater impact on global economic welfare and living standards.
There are good reasons for the lack of visitors. Ras Laffan site tours are strictly controlled and usually discouraged by the companies operating there. That is not primarily to guard industrial secrets. It is simply too dangerous for crowds of non-essential personnel with, at best, perfunctory safety training to be allowed to wander around industrial sites where a single thoughtless flick of a cigarette lighter could set off a conflagration. But the facilities' owners do sometimes like to show them off, so busloads of analysts or journalists are occasionally shepherded through the maze of cooling towers and processing paraphernalia.
My companions and I on one such tour of a gas liquefaction plant were especially struck by the kilometres of parallel piping that every few metres took a jaunty right-angled turn. The engineer who had volunteered to field our questions patiently explained that this was not to add quirky visual appeal to the installation, but for the practical purpose of allowing the pipes to flex harmlessly in response to temperature and pressure fluctuations. Appropriately enough for a facility that cools gas to minus 160° Celsius, the twists and turns of the piping made the place reminiscent of the back of a domestic refrigerator, enlarged many times and in three dimensions.
Equally appropriate were the numerous illustrated banners around the site aimed at reminding the multilingual, largely expatriate workforce to put safety first. A more cryptic roadside billboard announced that petrol vehicles were prohibited. How, I inquired, was our bus fuelled? Diesel, came the response, so no need for spark plugs. The 7.8 million tonne per year gas liquefaction "train" happened to belong to ExxonMobil and Rasgas, one of two Qatar state-owned companies involved in producing liquefied natural gas (LNG) for export from the world's largest liquefaction plants. It is almost identical to a facility with the Borg-like name of Qatargas 4 Train 7 that the other state LNG company, Qatargas, and Royal Dutch Shell are building at Ras Laffan.
So important is this project to Shell that the company has placed it and another Ras Laffan venture, the Pearl gas-to-liquids (GTL) fuel plant with a capacity of 140,000 barrels per day, in an administrative unit of their own. Shell's share of the capital costs for these projects could amount to as much as US$21 billion (Dh77.13bn), comprising $2bn for the LNG plant and up to $19bn for Pearl. The Pearl plant, when completed in about two years' time, will have more than three times the production capacity of the largest commercial GTL developments. It has been billed as the world's most expensive single energy project.
The lofty price tag, about $1bn higher than the original estimate, has sparked questions about the project's economic viability. The chief financial officer of Shell, Simon Henry, recently told analysts visiting Ras Laffan that Pearl and the LNG project were "attractive investments" and should deliver a 15 per cent rate of return on capital at an oil price of $70 a barrel. Whichever way you slice it, however, Pearl represents a huge bet on the future of natural gas, a fossil fuel that many worthies travelling to Copenhagen would prefer stayed in the ground.
Shell and Qatar Petroleum might wish that the aeroplanes carrying the conference delegates were fuelled by synthetic jet fuel made partly from natural gas, like the Qatar Airways Airbus that last month was the first to use the fuel on a commercial passenger flight. Proponents of the synthetic fuel say it is less polluting than conventional jet fuel, even though carbon emissions may be similar. The GTL conversion process, however, throws off hydrogen as a by-product, which would normally be sold to an oil refinery and used to dilute the carbon in petroleum-based fuels.
Overall, the most cogent environmental argument for using gas or gas-derived fuels in place of oil or coal is that this results in lower emissions of carbon dioxide, a greenhouse gas linked to global warming. The International Energy Agency, which advises developed nations on energy issues, supports capping the concentration of carbon dioxide in the atmosphere at 450 parts per million and has urged all nations to reach an agreement in Copenhagen on how to achieve that. But its chief economist, Fatih Birol, has said that gas could be a bridge fuel. "If there is a climate deal reached, gas demand will still increase," he said recently. "Gas may well be a transition fuel to go to a clean energy future."
Bridges, more than skyscrapers, have been an enduring symbol of the economic advances that ingenious engineering makes possible. @Email:tcarlisle@thenational.ae
