Responsibly-sourced natural gas (RSG) is key to unlocking more demand for the fuel overseas, but largely in countries that can afford it, according to a panel of U.S. producers and exporters that spoke in Washington, DC, earlier this month.
“RSG is a contract between a region that is privileged to have the supply and a region that is privileged to be able to pay for it,” said EQT Corp. General Counsel William Jordan.
“When we step back and say, ‘we need to have these rigorous standards around liquefied natural gas (LNG) and our gas exports,’ we really need to understand that if we apply that across the board, then we are totally ignoring the vast majority of benefits that gas can provide in the interest of climate change,” he added during a panel discussion at the North American Gas Forum (NAGF).
Natural gas has a lower carbon intensity than coal, and LNG exports are seen as one way to displace the fuel across the world, particularly in Asia.
Both domestic and international buyers are increasingly purchasing RSG, or natural gas certified by a third party that monitors emissions and other metrics during upstream operations. The certifications are aimed at demonstrating that production has a minimal impact on the environment and surrounding communities. For now, certified gas is costlier.
Project Canary CEO Chris Romer, whose company certifies natural gas production, told NGI earlier this year that nearly 20 trades have occurred so far for RSG, with the differentiated product fetching premiums of more than 10 cents above benchmark prices in some cases.
Kevin Book, a managing director at ClearView Energy Partners LLC, said during the panel discussion that in parts of the world where efforts are underway to maximize clean, affordable energy output, RSG is key. He said demand is highest in the United States and Europe, “in areas where costs could ostensibly be passed through.”
While an unprecedented effort is underway to track and curb emissions along the oil and natural gas value chain, questions have emerged about who should foot the bill and how best to accomplish those goals.
EQT, the largest U.S. natural gas producer, has worked aggressively to ensure much of its Appalachian natural gas production is certified as responsibly produced. The company is working with Equitable Origin, MiQ and Project Canary on separate RSG pilot programs. Along with other leading natural gas operators, EQT also joined GTI’s Veritas project this year. The initiative is focused on demonstrating emissions reductions in a consistent, credible and transparent way.
“The reality is that we really don’t know the technologies’ capabilities all that well yet,” Jordan said of the various monitoring and emissions capturing capabilities on the market today. That’s one reason why EQT is working on various pilots.
“It’s not like as an industry we’re holding back from perfection. The technology is not there yet,” he added. “As we’re thinking about it, this is all an evolution, it’s all a journey to participate in understanding the capabilities of the different monitoring technologies. We can use that information to kind of come together with a layered approach that gets us to optimal.”
“Perfection is not going to exist, but at least we can come at it from a systems engineering standpoint to say, ‘what’s the best layering to get the minimal amount of emissions?’”
EQT is taking part in a number of other climate-related initiatives and management has been stressing the role natural gas can play across the world as a cost-effective way to replace carbon-intensive energy sources.
EQT and other producers partnered with Cheniere Energy Inc. earlier this year to better monitor and cut greenhouse gas emissions (GHG) upstream from Cheniere’s export terminals. Majed Limam, a consultant at Poten & Partners, told NGI that “Cheniere has done extensive research and analysis on the subject” of tracking emissions tied to its export cargoes.
The company plans to provide customers with GHG emissions data for each cargo it loads beginning next year.
“We’re all figuring out together what are the numbers, and it’s not a right or wrong,” said Cheniere’s Khary Cauthen, vice president of federal government affairs. He said during the panel discussion that for now the company is working toward giving the best possible measurements to international buyers with strict climate mandates so that they can plug them into their internal frameworks.
“Everybody is interested in this space,” added Jeff Hammad, chief commercial officer at Golden Pass LNG. “We’re all watching companies like EQT and Cheniere, all the active participants. We understand that they’re serious about building incredible monitoring solutions.”
Golden Pass, which would have the capacity to produce 16 million metric tons/year of LNG, is under construction in Sabine Pass, TX. It’s slated to come online in 2024 and Hammad told the NAGF audience that the company is taking advantage of that lead time to decide how to further limit the facility’s environmental footprint.
“Everybody I know is going to get on this bandwagon; it’s going to happen,” he added of RSG and other carbon-neutral efforts. “But there’s still enough noise and fluidity in the conversation that we intend to take advantage of our 2024 start-up.”
In the meantime, Golden Pass, which would become one of the largest natural gas buyers in the United States when it comes online, is exploring RSG.
“This is a message to all producers,” Hammad said. “If you want a seat at the table to sell long-term gas to Golden Pass LNG, if you have a credible RSG plan, you get a seat at that table. We’ll have a conversation. That’s what we’re doing today. We’ve already started signing long-term deals, and we’ll continue to do that.”
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