Natural Gas: A Voice Too Soft?
Is the voice of gas too loud, loud enough or too soft? Of those in attendance who took part in the instant polling at the World Gas Conference 2015 in Paris, France, 78% contend that the voice of gas is too soft.
How can gas raise it's voice? asked speaker Beate Raabe, Secretary General, Eurogas, who opined that it is not how loud gas's voice is, but what it's saying, which can differ depending on one's geography.
She offered, “Gas is in a very different situation if you are in the US, or whether you are in Europe. If you are in Asia, the perspective of gas is a different one again.”
Ms. Raabe noted that gas has lost market share in Europe. She reported, “From 2013-14, it was 11%, and between 2010-14 it was 20% - so we lost one-fifth.” She said this is due to a number of circumstances.
“Gas is facing challenges in all the three areas: climate policy, security of supply and competitiveness,” she said, explaining that the EU wants to achieve greenhouse gas emissions reductions of 80-95% by 2050, with targets in between.
She said, “Gas is good, it's poor in CO2 compared with other hydrocarbons, but it still has got carbon and because of that it's not particularly popular – maybe accepted as a necessary evil in the transition, but that's all.”
Ms. Raabe pointed out that regarding security of supply, the crisis between Russia and Ukraine has given gas the reputation of being a political weapon, pushing some countries away from using natural gas.
“As far as competitiveness is concerned, gas has been squeezed between subsidized renewables – because the EU also wants to increase them; it's rooted in the EU treaty and targets have been set on that side as well. On the other hand, coal has been very cheap, a lot cheaper than gas, because the US is producing gas and the coal has been available to Europe.”
What can be done, given this scenario? She said gas has something very important to offer: “It can grow together with renewables – it can actually help renewables to grow by complementing the intermittency of wind energy, solar energy, and that's something we need to focus on, because if we rub the politicians' nose into the fact that the share of coal has risen, that emissions have not gone down as much as they could have without the coal revival, then you get very embarrassed looks, because everyone's aware of that.”
If the natural gas industry were to help the EU reach its goals with gas, she opined, it would be a different story. “We can do that by showing how gas can help in power generation and in heating, by being complementary to intermittent renewables, and it can also help in transport,” she explained.
Of the completely different situation in the US, Dr. Paula Gant, Deputy Assistant Secretary for Oil and Natural Gas, US Department of Energy (DOE), offered some perspective, saying she brought some really good news.
“It turns out we have a tremendously abundant supply of natural gas,” she said, explaining the transformation of America's psyche from one of energy scarcity to one of abundance – something that is creating a lot of opportunity.
She reported, “We've seen an increase in domestic production over the last decade, from 65 BCF/day to now around 92 BCF. Ten years ago, the top well produced 5 MCF/day and this past year that went up to 30 MCF/day, an increase in production fuelled by investments, many from companies in this room, and governments investing in science and technology.”
Such developments, she said, have allowed for the US to reduce its greenhouse gas emissions, and contribute to the growth of the economy. According to her, GDP is up 8.7% over 2007.
She commented, “The outlook is robust. We expect it to outpace our expectations that the shale resource contributes to domestic energy supplies.
Meanwhile, she offered that the EIA estimates the US will be producing 42 BCF/day by 2020.
Of the DOE's role, she explained, “We're very focused on making sure that the nation and the world are able to realize the promise presented by this abundant domestic resource.
“In our office, in particular, we're working on efforts to ensure that we have the public's confidence that this resource can be produced in a responsible way, doing the right kinds of research and developing the right kind of technology to mitigate any unintended consequences for producing these resources,” said Dr. Gant.
Pierre Breber, Corporate Vice President and President, Chevron Gas and Midstream, opined that gas already has a strong voice according to the turnout at WGC, and spoke of Chevron's flagship LNG projects off the coast of Australia, Gorgon and Wheatstone, making the company one of the world's largest suppliers.
He offered, “We expect energy demand to grow by 40% by 2035, because the word's middle class will continue to grow and it aspires to the quality of life that we enjoy. Demand for natural gas alone is projected to grow by 50% over the next 20 years, which will make it the fastest growing fossil fuel.”
That demand, he said, will be met by the current wave of LNG being developed in Australia and export coming from the US. In the future, said Mr. Beber, greater convergence is expected between the world's markets as US LNG exports connect for the first time the deep and liquid markets in the US and Europe with those of Asia. Lots of robust competition can be expected from the next wave of LNG projects coming from Canada, East Africa, expansions in Australia and other areas competing with US exports.
Mr. Breber explained, “The projects that go forward will be cost competitive, will enhance supply diversification and security and will need strong buyer support.”
The current market, he noted, entails the risk of increasing supply while demand is growing slowly in Asia. “There is the risk that buyers and producers will not maintain momentum for the new supply required to meet demand to 2020,” he said, explaining that the industry needs to plan 5-10 years ahead with multiple, geographically diverse LNG projects and hubs to meet future demand – this involved buyers, sellers and host governments working together to meet buyers' needs and provide suppliers with adequate returns on investment, according to Chevron's Pierre Breber.
-Drew Leifheit