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LNG expert: Curbing emissions is key to gas industry's role in energy transition

The natural gas industry will need to solve its venting and flaring problems if it wants to be part of conversations about how the world moves toward a lower-carbon energy system, an adviser to a U.S. LNG developer said Oct. 23.

The comments came as the 2019 North American Gas Forum in Washington, organized by Energy Dialogues, turned more of its focus on the implications for gas markets of the growing national and global debate about carbon regulation.

"First of all, we have to solve the flaring problem; we have to solve the venting problem," Octávio Simões, senior adviser to Tellurian Inc. CEO Meg Gentle, told the conference. "If we don't do that, we have absolutely no credibility to be part of the dialogue" about the energy transition, Simões said.

Rapid change scenario

Berkeley Research Group's Christopher Goncalves said U.S. gas demand would see increases through 2025 as it displaces coal but a decline thereafter as renewables displace gas. Goncalves backed the assertions with BRG forecasts through 2035 on the impact of a rapid implementation of aggressive climate policies, based on an analysis of the International Energy Agency's "sustainable development scenario."

LNG exports would decline for all countries under the scenario, although the U.S. decline would be mitigated by the timing of final investment decisions and relatively cheap U.S. supplies. Qatar would see little impact. Russian and Australian gas exports are expected to take the largest hit, according to the BRG analysis. India would see a steep demand increase, upwards of 20%, while China's demand would grow more modestly, according to BRG.

To head off more polarized politics and the more disruptive policy prescriptions it might bring, multiple conference participants said the gas industry needs to take part in broad coalitions with other stakeholders and make the case for gas to play a key role backing up renewables.

Paul Jefferiss, head of group policy for BP PLC, said collaboration with governments will need to be extended and be faster if the goals of the Paris Agreement on climate change are to be met.

BP welcomes a rapid transition, Jefferiss said, viewing that as preferable to a late and disruptive shift. While for two decades, BP has called for a carbon price, so far, progress around the world on that has been "piecemeal and slow," Jefferiss said. In the meantime, Jefferiss expressed concern that some governments were moving toward more "direct interventions" that are less economically efficient, up to and including a ban on new gas infrastructure.

Pressure for regulation

Representatives from the Environmental Defense Fund, or EDF, which frequently collaborates with the industry, pressed the gas sector representatives to join several oil and gas majors already objecting to a Trump administration proposal to reduce federal regulation of methane emissions created by the industry's operations.

At a time when technology is advancing to make reducing emissions cheaper and more effective, Mark Brownstein, senior vice president of EDF, said the public backlash against gas is growing in major markets. "Campaigns to roll back federal regulation or oppose state action will hand opponents a club to use against the industry, and they will use it," Brownstein said.

Brownstein also provided details on an upcoming EDF initiative, estimated to cost $80 million, to launch a satellite to regularly monitor methane emissions. The satellite would allow for more accurate estimates of industry emissions and increased accountability.

Simões suggested the methane regulation swings were a "complete illustration of polarization," in which an odd approach on one extreme is answered by an odd approach to another.

"That's the kind of dynamic that leads us nowhere," Simões said. In spite of the Trump administration's deregulatory push, Simões said companies are listening to their customers. If the customers are saying that methane is an issue that needs to be resolved, "they will work to resolve it."

Maya Weber is a reporter with S&P Global Platts. S&P Global Market Intelligence and S&P Global Platts are owned by S&P Global Inc.