Although BP, North America's most prolific gas marketer, plans to help lead the world's energy transition and become a net-zero company by 2050 or sooner, natural gas will continue to be part of the equation to meet the globe's ever-growing energy demand.
However, the fuel's role might change dramatically to realize these ambitious goals, Dawn Constantin, BP's vice president of regulatory affairs, said during the LDC Midcon Forum in Chicago Sept. 15.
"Fundamentally, we are transitioning from an international oil company to an integrated energy company," Constantin said. "In February 2020 our new CEO took over our company and announced our new ambition, a net zero company by 2050 or sooner. And we will help the world get there in the same time. It's quite a difference from how you might have known BP in the past."
"We know we have the perception that we are part of the problem, but we want to be part of the solution. We want to be part of the change as the world changes, too."
Constantin stressed that despite adaptations of new fuels and technologies to help achieve the net-zero goal, natural gas will continue to play a vital function for the foreseeable future. BP's North American Gas and Power marketing and trading business averaged 14.64 Bcf/d of total third-party natural gas sales-volume estimates during the second quarter of 2021. It has remained No. 1 on the S&P Global Platts North American Gas Marketers Rankings by a sizable margin for more than a decade.
BP's volumes sold have declined steadily over the past half decade. The company averaged more than 22 Bcf/d.
"Let's be clear, this isn't a race to an all-renewable future, it's a race to getting emissions down," Constantin said. "Even by 2050 in the lowest emission scenarios, we are still using natural gas and oil."
"Natural gas is a significant portion of the scenario today. How do we get to 2050? The US produces 90 Bcf/d or so of natural gas. You can't just replace that overnight. We use it domestically, and we also export a lot to other parts of the world."
In 2020, when demand was down slightly due to pandemic, the US demand still averaged of 88.4 Bcf/d, according to S&P Global Platts Analytics data. It is averaging 91.2 Bcf/d year to date in 2021. Year-over-year demand growth is being reported in most sectors, including industrial, residential and commercial, LNG exports and exports to Mexico.
"It's affordable to other fuels, despite the high prices today," Constantin said. "You can't just replace 24 to 25 Bcf/d of supply for industrial demand and even more for power generation."
Reduction of flaring remains one way most operators are cutting emissions. BP plans to eliminate all wellhead flaring by 2025. Carbon capture and using natural gas to create hydrogen fuel also provides a pathway to lower emissions.
"We really need to get after carbon capture and storage," she said. "If you can take the carbon out of the natural gas, you could store the carbon and take the hydrogen molecules and send to market. Blue hydrogen is associated with natural gas. It could be of value in the changes going on today. There are lot of ways it could be part of the low carbon future."