LNG from the US can fuel power plants and help cut carbon emissions globally by displacing coal, but the gas industry needs to step up and address its own emissions issue -- methane -- the head of the International Energy Agency warned.
Such investments, even those driven by stringent regulations, would have a nominal impact on the average cost of gas production, IEA Executive Director Fatih Birol said at an industry event in Washington that the American Petroleum Institute, the Center for Liquefied Natural Gas, and LNG Allies organized.
Birol estimated the average cost of production would increase by a maximum 7% in the most difficult case.
"In my view, companies should not be so greedy," Birol said. "When you look at the future, the Achilles' heel of the gas industry is the methane emissions. And the good news is for the industry, this can be fixed by existing technology, only using the best practices. And I can tell you that many companies are taking this seriously."
Minimizing methane emissions would have gas play a bigger role in reducing air pollution and aiding energy transitions, Birol said. Longer-term planning for the adoption of hydrogen, biomethane, and carbon capture utilization and storage will enhance the sustainability and social acceptance of gas infrastructure.
LNG COMPANIES' VIEW
Representatives of the US LNG industry also zeroed in on the importance of methane and carbon emissions reductions during the Thursday conference.
Representatives of LNG pioneer Cheniere Energy, fellow exporter Sempra Energy and export hopefuls Tellurian, NextDecade, and LNG Ltd. said the oil and gas sector needs to step up on reducing carbon emissions as the LNG industry promotes climate benefits of American natural gas.
US LNG veteran Octavio Simoes, senior adviser to the CEO of Tellurian, advocated for measures to end the widespread flaring of natural gas. "We cannot afford to be saying gas is a great fuel for lowering CO2 emissions and then burning 1 Bcf of gas in the basins," Simoes said, adding, "It just doesn't make any sense."
Simoes also called for companies to continue pursuing efforts to eliminate natural gas leaks, and he said he supported a US carbon tax, as Tellurian co-founder Charif Souki has also done.
Cheniere Vice President Robert Fee pointed to his company's published climate and sustainability principles, which include support for the Paris Agreement on climate change. The principles state that Cheniere "is taking steps to promote emissions reporting and mitigation practices across our suppliers, many of whom have already taken voluntary steps to reduce methane emissions."
REPERCUSSIONS
Sempra Vice President Brian Kelly talked about public pressure on the industry to curb natural gas leaks and make other emissions reductions, including opposition to gas infrastructure in the Northeast US and attempts in parts of the country to ban hydraulic fracturing.
"We have to be smart," Kelly said. "I agree 100% -- if we don't start addressing the methane issue, it's going to come back to bite us."
Frank Macchiarola, American Petroleum Institute's vice president of downstream and industry operations, pointed to API's establishment of the Environmental Partnership, a collaboration of exploration and production companies on best practices and techniques to more effectively capture methane
"As a first principle, our industry views reducing methane emissions as a priority, in part for the benefit of reduced emissions to the environment but also as a smart business practice in and of itself --- being able to capture [the product] we want to bring to market," he said.
To continue progress the sector has made through exports, "the industry is going to meet this challenge head-on," Macchiarola said.
As it stands, global coal to gas switching has reduced C02 emissions more than 500 million mt from 2010 to 2018, according to the IEA. The countries where much of those reductions took place were the US and China. Birol compared it with replacing 500 million cars with internal combustion engines with electric vehicles.
But there is the potential for reducing on a similar scale the emissions caused by transmission and distribution of natural gas for the global power system from wellhead to light switch, according to Sarah Marie Jordaan, an assistant professor at the School of Advanced International Studies at Johns Hopkins University.
"Reducing emissions plays a large role in overall competitiveness in the long term, particularly when we are thinking about reducing wastage of a commodity that does have an increasing market size with the growth of the LNG industry," Jordaan said.
