For a few days at this year’s global climate conference, it looked as if the whole thing might end without an agreement over the role of fossil fuels in tackling rising temperatures.
But the consensus arrived on Wednesday that the world should transition away from fossil fuels.
This was, in fact, more controversial than it might sound.
It’s the first time that fossil fuels are mentioned in such pledges. And, this year’s conference, COP28, was chaired by Sultan Ahmed Al Jaber, who skeptics suggested would not bargain for the climate in good faith given his position as head of the United Arab Emirates’ national oil company. Even as he promised that the conference would be more inclusive this year, welcoming many representatives from fossil fuel companies, critics worried that the fox was being placed in charge of the hen house.
One thing that was clear from the start: Oil and gas was always going to be on the menu as world leaders convened in Dubai.
Toby Rice, CEO of Pittsburgh-based EQT Corp., wanted to be at the table when it happened.
“When you’re talking about climate, you’re talking about energy and that’s our business,” he said in an interview with the Atlantic Council, which hosted one of the side events at COP28.
Mr. Rice has branded and promoted as economic and climate policy an initiative he calls “Unleash LNG,” which involves drastically increasing the amount of natural gas that the U.S. exports abroad where it would presumably be used to displace coal burning.
He is earnest in his ambassadorship for shale gas as a balm for a number of the world’s problems, promising to first taper to zero emissions from the production of natural gas and then use carbon capture and sequestration to get rid of the rest of the greenhouse gas impact of using the gas in power plants.
“The people that are crafting the energy infrastructure of tomorrow should be industry,” Mr. Rice said from a stage inside the David L. Lawrence Convention Center last month, where he previewed his COP28 talking points in front of an energy crowd at Hart Energy’s Developing Unconventional Gas Appalachia conference on Nov. 30. “Because guess what? Decisions will be made. The question is, are we going to be part of it or not?”
At COP28, EQT was among 50 oil and gas firms that signed on to the Oil and Gas Decarbonization Charter at the event last week. The document says the companies will work to bring their emissions to net zero by 2050, although EQT expects to reach that target by 2025.
In Pittsburgh, Mr. Rice previewed his message of LNG diplomacy while other speakers at the event supplied the math that showed the LNG train has already left the station.
The U.S. is currently sending abroad about 11.6 billion cubic feet of gas daily, or 12% of all the gas it produces. The liquefaction facilities that cool and pressurize all that gas for shipping were built only within the past eight years. And judging by the number of additional LNG projects in the works, gas exports are slated to more than double by the end of the decade. Enverus, an oil and gas digital intelligence company, projects that by 2030, 20% of U.S. gas will be headed abroad.
Many of the projects being built have signed offtake contracts that span between 15 and 20 years, securing the financial future of U.S. gas exports. While fierce debate raged at COP28 on whether a fossil fuel “phase out” or “phase down” should be a mandate, it’s hard to see how policy changes would interfere with LNG’s prospects in the medium-term.
“People are investing billions of dollars into each individual project,” said Josie Mills, a senior associate with Enverus. “There would be a ton of pushback to anything that would impact that.”
Still more billions are being invested in building and expanding pipelines to get that gas to LNG terminals.
Enverus recently analyzed the global market for LNG, which currently sits around 50 billion cubic feet (bcf) daily and is projected to grow by another 30 bcf by 2030. Half of that increase will be supplied by U.S. gas producers, Ms. Mills said.
It’s not surprising that the leader of EQT, the largest U.S. gas producer, is invested in LNG growth.
Natural gas is mostly methane, which, if leaked or vented into the air is a far more powerful greenhouse gas than carbon dioxide over a 20-year horizon — the period that matters most in preventing global temperatures from rising to catastrophic levels.
But when it’s burned, gas has a lower carbon impact that gas or oil. And it’s this delta that forms the basis of Mr. Rice’s grand proposal. Replacing coal — and Mr. Rice always stipulates “foreign coal” — with U.S. gas will decrease greenhouse gas emissions right away, he says.
If time is of the essence, he said in Pittsburgh, if there is a finite carbon budget over the next two decades, “natural gas will hit right now.”
“And guess what, in 20 years, if there’s something better than natural gas, replace us with something that’s more cost effective, more reliable, and cleaner. Replace us. That’s the game we signed up for. That’s the market forces.”
Gas has indeed replaced a lot of coal-powered generation on the U.S. grid over the past two decades when fracking unleashed cheap and voluminous fuel in Appalachia, Texas and elsewhere. It’s not yet clear if the same dynamic will play out abroad and if it would happen in a time frame that dents climate projections.
Today, the biggest chunk of American LNG goes to Europe, which ramped up imports dramatically after its previous gas supplier, Russia, invaded Ukraine in February 2022. Europe overtook Asia as the top destination for U.S. gas, but that’s a temporary story, analysts say.
“The real story here is the growth in Asia,” said Emily McClain, vice president of North America Gas Markets at Rystad Energy, speaking at Hart’s conference last month. In fact, she said, “that story hasn’t changed.”
Looking back over the recent past, Ms. McClain said there has been a change in how natural gas is perceived in the market.
“The energy crisis — the energy security narrative has really stepped in front of sustainability,” she said.
It’s hard to compare the energy demand of China to other nations, Ms. Mills said. Plotting on a chart requires a different axis because it’s so high and its projected growth so steep.
China will be the biggest LNG demand driver, but during the time that it plans to more than double the amount of electricity it produces from gas, the amount of new coal-powered electricity production will be many times greater, she said.
“It’s all growing together,” she said.
