World Energy Resources | 2016

WORLD ENERGY COUNCIL | WORLD ENERGY RESOU RCES
ConocoPhillips has moved away from pre-FID LNG projects referencing lower returns, low
flexibility, and long cycle times. 71 Similarly, Chevron decided that no FID would be made on
the Kitimat LNG project in 2015. 72
RISK ANALYSIS
The biggest risks to natural gas markets currently is their inability to compete against more
economic, secure and environmentally friendly substitutes in transport, industrial use and
power.
Affordability
Under current policies, existing coal, nuclear and hydro plants may provide more economic,
and for many nations, more secure alternatives to natural gas for baseload power. While in
Europe and the US, the levelised cost of generating power from new CCGT is now cheaper
than from new coal-fired units, the competitiveness of new gas-fired and coal-fired plants is
skewed towards coal in emerging economies that rely on imports for gas supplies. Absent a
carbon price and more stringent regulations on air pollution and carbon emissions, natural
gas has struggled to take share from cheap coal in these regions. In developing regions
that rely heavily on LNG imports, governments must balance environmental sustainability
with income and energy equity. In India for example, this has led to a delay in expanding
natural gas infrastructure and continued growth in coal generation [1] . The Indian
government has openly stated its views on coal as the current best option to deliver the
energy needed to improve the standard of living for millions of people.
FIGURE 21: GLOBAL UNSUBSIDISED LEVELISED COST OF ENERGY
$- $50 $100 $150 $200 $250 $300
Gas Combined Cycle
$52
$78
Coal
$65
$150
Nuclear
$97
$136
IGCC
$96
$183
Gas Peaking
$165
$218
Natural Gas Reciprocating Engine
$68
$101
Diesel reciprocating engine
$212
$281
$- $50 $100 $150 $200 $250 $300
71
ConocoPhillips (2015) ConocoPhillips Investor Update: May 14
72
Chevron (2015) 2015 1Q Earnings Transcript.
42