France's Total partners with Siemens Energy on LNG emissions reductions - S&P Global

Houston — French energy major Total said April 13 it is working with Germany's Siemens Energy to study ways to reduce carbon emissions in LNG production, amid similar efforts by North American exporters and liquefaction terminal developers.

The global energy transition to greater use of cleaner-burning fuels has presented challenges for producers in securing new buyers of their supplies and addressing the impact on their growth goals in a future that is forecast to see lower demand for fossil fuels after 2040.

Some market participants are taking proactive measures now, to make their LNG more palatable to regulators, bankers and end-users. Total, with a significant LNG portfolio that is expected to reach 50 million mt/year and a global market share of about 10% by 2025, has a big role to play in Europe, and in the US and Mexico, where it is both a producer and an offtaker.

"This collaboration with Siemens Energy brings many opportunities to further reduce the carbon footprint of our activities, especially in our strategic LNG business," Total's upstream chief Arnaud Breuillac said in a statement.

"The development of low-carbon LNG will contribute to meet the growth in global energy demand whilst reducing the carbon intensity of the energy products consumed," Breuillac said. "Reducing its carbon footprint is essential for LNG to play its role fully in the energy transition."

The agreement between Total and Siemens Energy is a technical collaboration designed to deliver "industrial-stage" solutions. These include combustion of clean hydrogen in gas turbines, competitive all-electrical liquefaction, optimized power generation, and the integration of renewable energy in liquefaction plants' power systems.

In addition to its interests in Europe and Africa, Total is a joint venture partner in Sempra Energy's Cameron LNG export facility in Louisiana. It was a foundation customer in Cheniere Energy's Sabine Pass terminal in Louisiana and has offtake commitments at Freeport LNG in Texas. In Mexico, it has an equity stake in Sempra's Energia Costa Azul liquefaction facility, which is currently under construction.

As the biggest US LNG exporter, Cheniere is a major buyer of physical gas that it uses in the liquefaction process. Much of the gas is drilled in shale basins stretching from the US Gulf Coast to the Northeast to Western Canada.

In February, Cheniere said it would give its LNG customers emissions data associated with each cargo it produces at its two US export terminals, in a bid to make its environmental footprint more transparent. Tellurian CEO Octavio Simoes said in an interview with S&P Global Platts on March 25 that the developer of the proposed Driftwood LNG terminal in Louisiana supports a carbon tax to reduce greenhouse gas emissions and, like Cheniere, would be in a position to provide customers with detailed information about the carbon profile of individual cargoes from its facility.

Also in March, NextDecade launched an aggressive carbon capture project tied to its proposed Rio Grande liquefaction terminal in Texas.

With strict carbon emissions goals, European utilities are being pressured to shy away from signing new deals for importing US shale gas. France's Engie said in November 2020 that it had halted talks with NextDecade about a supply deal tied to Rio Grande LNG.

ESG profile

In an April 13 report evaluating Freeport LNG's capacity to deal with the impact of increased emphasis in the LNG market on environmental, social and corporate governance, S&P Global Ratings described the operator's preparedness as "adequate."

It said its analysis was based on Freeport LNG's "good awareness of material strategic risks and a good track record of strategy execution, but is limited by a lack of strategic focus on innovation and sustainability across its employee base and decision-makers and limited ability to pivot given the fixed and specialized nature of its assets."

"As the only all electric drive facility of its kind, Freeport LNG looks forward to building on our sustainability and climate preservation efforts, while continuing to engage with our employees, the communities in which we operate and other key stakeholders," company spokeswoman Heather Browne said in an e-mailed statement. "Safely and efficiently providing clean energy and sustainable solutions to our customers remains the focus of our operations."