The world will need more energy, but consumers want it with fewer emissions, creating a challenge that is placing rising pressure on energy companies and their natural gas infrastructure.
"Where do you find balance?" Dawn Constantin, BP Energy Co. Inc.'s senior vice president of marketing and regulatory affairs, asked attendees at the LDC Gas Forum Northeast.
Attempting to answer that question presents BP and other large energy companies with what Constantin described as a "dual challenge" that has changed the conversation around energy. As the standard of living improves around the world, the energy sector is tasked with meeting not only the associated rising energy demand but also the growing expectation that energy companies need to be cutting their emissions, Constantin said.
U.S. shale gas could supply a big piece of that energy mix. "The growth of gas supply in this country has been nothing short of phenomenal," Constantin said in her keynote at the Boston conference June 11.
But as a fossil fuel, it faces political resistance, Constantin noted. Countries around the world and state governments in the U.S. have turned to renewable energy, such as wind and solar power generation, and other low-carbon options to reduce climate change and other environmental impacts. The gas sector has been working to position itself as fitting with and within the slate of climate-conscious energy suppliers.
In North American, the gas industry is tackling emissions by replacing older equipment, monitoring its systems with the help of drones and other technology, and otherwise improving efficiency, Constantin said. Still, the sector is running up against rising opposition.
"There is more risk to build infrastructure than five or six years ago," Constantin said.
Resistance to fossil fuels is slowing down the development of the pipeline projects connected to the biggest U.S. production zones, which puts downward pressure on gas prices in those areas and keeps limits on shale gas production.
In Appalachia, the gas industry is concerned that gas transportation projects such as the Dominion Energy Inc.-led, 1.5-Bcf/d Atlantic Coast pipeline and the EQM Midstream Partners LP-led, 2-Bcf/d Mountain Valley pipeline, both hit with lawsuits after receiving federal approval and starting construction, could take a while to complete. And even in Texas, where the proposed Permian Basin pipelines would mostly be intrastate lines, there could be permitting delays, a problem for developers that would have been unlikely a few years ago but is the result of the change in the conversation around energy, Constantin said. The executive pointed to a state eminent domain bill, which showed that landowners are moving to protect their properties.
Echoing analyst commentary from the day before at the conference, Constantin said LNG exports to the world and pipeline exports to Mexico will be a "chunky piece" of the demand for gas in the U.S. as the country steps up as a net gas exporter. But exports come with their own challenges, Constantin said. The exchange of tariffs between the U.S. and China has the potential to put a damper on LNG exports to this big part of the Asian market. Mexico has given U.S. gas imports an important place in its energy portfolio as it builds power plants and factories that can take advantage of cheap energy from the north, but Constantin said a big question is if demand there climbs to a significant level of 7 Bcf/d or higher.
U.S. power generators are using more gas than ever, but wind and solar are also claiming a piece of new generation capacity. As states address the dual challenge and as renewable energy looks more attractive, states' choices have created uncertainty for power companies and pipeline operators. Everyone wants environmental protection and clean air, Constantin said, but a goal of zero carbon in the next decade in the PJM Interconnection region alone would mean a large change: namely, the displacement of 5-Bcf/d worth of gas-fired power generation.
"The grid has to remain stable," Constantin said. "We have to balance it. There has got to be a path."