Innovation to bring growth in US LNG exports, climate solutions: DOE's Winberg

Florence, Italy — Technology and innovation will ensure the continued growth of US LNG exports, with China seen as a growth market despite the current coronavirus outbreak, Steven Winberg, The US Department of Energy's assistant secretary for fossil energy, said in an interview.

Winberg said coronavirus had put a brake on the recovery in US LNG exports to China expected under a 'phase 1' trade deal agreed by the two countries last month. But he said the upset was temporary and the Chinese imports would resume.

Winberg also said international discussion of climate change was too narrowly focused on renewables at the expense of other options, including potential "clean coal" solutions for less well-off countries that have little choice but to burn the fuel. Alluding to the possibilities of technological innovation, he said, "The technology story is never fully written."

On LNG exports, Winberg voiced confidence that despite recent market weakness, US companies planning new export facilities would achieve efficiency gains and reduce their costs, making such projects viable.

"We're continuing to build, we're going to increase our LNG exports over the next three or four years by another 50% over what we are now. And then we can go all the way up to almost 400 million cu meters/d" on an annual basis, just with projects already authorized by the DOE, he told S&P Global Platts on the sidelines of the Baker Hughes AM2020 conference in Florence, Italy.

"These companies that are developing export terminals are learning how to do it efficiently, so their capital cost is going down, their operating cost is going down. You combine low well-head gas prices, lower capital costs, lower operating costs, and they can compete in the market."

Also stimulating growth would be last month's trade deal, which obliges China to accept $52.4 billion of energy-related imports from the US in 2020-21, Winberg said.

"I believe China will fulfill its agreements so we're going to see energy moving," he said. "It's LNG, crude, refined products and it's coal: metallurgical coal and thermal coal. The Chinese New Year and this very unfortunate virus is slowing down the start of it, but I think we're going to see that activity pick up, this year."

Energy security

In terms of energy security, Winberg said he was "not particularly worried" for US shale drillers at a time of low oil prices, given the flexibility of the independent companies involved. "Those independents operate a bit differently than the majors, so if there's an opportunity for them to make a margin that's acceptable, they'll go back in and start drilling. It's going to be more fluid than it was... a shorter time to get in, and then the opposite is also true: shorter time to back out," he said.

Winberg said that while in Europe he would reinforce President Donald Trump's recent encouragement of European countries to open up to US LNG.

"One of the things Europe definitely needs is more investment in LNG import terminals, regasification and distributing that natural gas into the communities where the demand is. That needs to happen," he said.

"If that happens, then any hold that Russia has on countries will be lessened," he said, referring to Russia's traditional dominance of European gas supply.

Winberg, who is also visiting the Balkan countries of Albania and Montenegro, said some countries could initially receive LNG by road or rail, using so-called ISO containers, and a new initiative, the Partnership for Transatlantic Energy Cooperation, created "all kinds of opportunities" in this area.

Clean coal

Winberg also addressed technological responses to climate change that the DOE is pursuing, including a plan to pilot modular "clean coal" plants under its 'Coal FIRST' program.

"A lot of people are looking at energy the wrong way — this almost laser-like focus on renewable energy. But we sort of ignore the fact that we're going to have to be mining a lot of cobalt, mining a lot of lithium, producing a lot of copper to do this energy transition," he said.

"We can also take the fuels we have, the fossil energy, and make it clean, zero emissions or even negative emissions. We have a very robust program and it's moving quickly to select two or three of the best technologies for 21st century coal, and our intent is to build a 100 MW pilot plant, two or three of those."

"We think that it's clearly an opportunity around the world in developing countries that have coal under their feet. They're going to continue to burn it, and they can either use 1970s vintage technology or they can use 21st technology, so we're developing it."