Major liquefied natural gas (LNG) players are jumping head first into the energy transition, prompted in part by governments across the world that are prioritizing carbon neutrality, according to executives who consistently touched on the topic at CERAWeek by IHS Markit.
The world’s three largest LNG importers, China, Japan and South Korea, along with the European Union, have all announced goals for net-zero carbon emissions.
“It’s key now for the industry to embark on that journey” across the value chain “from the production of the gas, to the liquefaction, to the shipping and also downstream,” said Total SE’s Thomas Maurisse, senior vice president of LNG.
In the last year alone, the industry has announced a cascade of initiatives aimed at addressing the climate imperative. Major players have inked contracts requiring LNG producers to track emissions from the wellhead to import terminal, while others are delivering carbon-neutral cargoes offset with emissions certificates.
Cheniere Energy Inc., the largest U.S. LNG exporter, said last month it would track emissions for every cargo loaded at its Gulf Coast terminals beginning next year — an industry first. Export projects under development are also looking to utilize carbon capture, utilization and storage (CCUS), or neutralize emissions altogether.
“We will have to listen to the customer,” said PAO Novatek CFO Mark Gyetvay. “The buyer is going to determine what terms and conditions they really need to see in the future, and I think this idea we talk about in the greening of LNG and the certification process is also going to be important in the future.
“It’s not going to be an exception. This idea about premium pricing for green LNG is to me a myth. To me, it will be the normal process to be in the game. You have to certify through the value chain so that you can provide those types of certifications to the buyer market.”
Gyetvay said Novatek could reach a final investment decision by 2022 to install CCUS technology at its 16.5 million metric tons/year Yamal LNG terminal in Russia, which could be one of the world’s largest and most complex export terminals on the frigid Yamal Peninsula.
The remarks were yet another indication of the industry’s seeming embrace of the energy transition. Executives at the conference discussed the challenges, opportunities and costs associated with combating climate change as they addressed CERAWeek’s broader theme of the oil and gas industry’s role in the future of energy.
Total, a major LNG portfolio player, has made a serious push on energy transition initiatives, partnering with a variety of stakeholders, expanding its renewables and gas business and even becoming the first major to drop out of the American Petroleum Institute over differences on climate policy.
Maurisse said the company is working at points along the LNG value chain to better design ways to reduce emissions. For example, it is pursuing new processes and designs to electrify its gas facilities. He noted the company has also worked with both shipyards and shipowners to ensure cleaner operations on the transportation side.
“What is very important is to always try to be more transparent across the value chain and to bring to the final customers a transparent product,” he said.
Various initiatives are already underway across the upstream, midstream and downstream spaces, but some have questioned how long it might take to unify those efforts in an impactful way.
“From my perspective, we are not that far,” Maurisse said. “All of the majors have started to monitor their emissions; it’s a matter of commitment. What will be important is to try to harmonize the methodologies across the industry to be sure that we are all speaking the same languages, but a lot of progress has already been made. In terms of timing…we are already almost there.”
Venture Global Inc. CEO Michael Sabel stressed that coal-to-gas switching alone is enough to curb global emissions meaningfully.
“The gas industry is in a position to have the greatest near-term impact on emissions reductions that don’t rely on new technologies,” he said. “Inexpensive gas exported to Europe, Asia and other developing markets as they add additional electricity production is going to be one of the top opportunities the world has to reduce emissions.”
Even still, Sabel said Venture Global, which is developing four LNG export projects in Louisiana, is closely considering carbon sequestration technology for its terminals. He also noted that they should capture as much boil-off gas as possible that could be reused for on-site power generation.
Sabel also believes U.S. natural gas exporters will get a leg up from exploration and production (E&P) companies to better serve more selective clients overseas looking to curb their environmental footprints.
“We believe that the U.S. market — on the E&P side — is going to make continued investments to lower emissions at the wellhead, and that’ll be both commercially motivated but also from a policy perspective.”
Indeed, EQT Corp., the Lower 48’s largest natural gas producer, has partnered with environmental monitoring company Project Canary on a pilot project to continuously measure methane emissions at some wells in the Appalachian Basin. EQT would also obtain certification that natural gas from the wells is produced in an environmentally responsible way. Other U.S. producers have already received similar certifications.
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