Gastech draws thousands to Houston
While Texas and oil may seem synonymous, the nation as a whole is producing more natural gas than ever and Houston is the hub for the United States’ burgeoning liquefied natural gas export industry.
About 35,000 people from around the world are in town this week at the NRG Center for the international Gastech conference, which returned to both Houston and the U.S. for the first time since 2000.
The shale boom and the surge
in construction of LNG export terminals along the Gulf Coast are rapidly turning the U.S. into the world’s third-largest LNG exporter, behind Qatar and Australia, with much more growth on the horizon.
“We have more gas than we know what to do with,” said Charif Souki, founder of Cheniere Energy — the nation’s leading LNG exporter — and now the chair of Houston-based LNG and gas pipeline developer Tellurian. “We don’t have a place to put it. We don’t have any legitimate way of increasing domestic demand, so we must export it.”
Feeding Asian growth
The federal government estimates U.S. natural gas production will average a world-leading 91.4 billion cubic feet per day this year, up from less than 50 billion cubic feet daily in 2005 before the shale boom kicked off.
Responding to Houston’s ascendance in the field, the Federal Energy Regulatory Commission is in the process of setting up a new LNG division office in town. “We’re dipping into the incredible talent pool we have here in Houston,” said FERC Chairman Neil Chatterjee.
Most of the new LNG exports will head to Asia, where China and other countries are seeing rapid growth among their middle-class populations. Nadeem Babar, special assistant on petroleum to the Pakistani prime minister, and Ashish Chatterjee, joint secretary for the Indian ministry of petroleum and natural gas, appeared on the same panel and both said their countries are focusing on a combination of renewable energy and natural gas growth to power their nations, replacing dirtier coal. Emissions from natural gas are typically about half those from coal.
India Prime Minister Narendra Modi is coming to Houston this week to meet with Houston energy executives about LNG and more before he hosts close to 50,000 people at the “Howdy, Modi” event Saturday at NRG Stadium, including a visit from President Donald Trump.
Methane exposure
West Texas’ booming Permian Basin has emerged as the nation’s second-largest gas production area. Although everyone in the Permian is drilling for oil, the Permian also accounts for more than 15 percent of the nation’s natural gas output, and that’s not even counting the large volumes that are vented or burned off, via flaring, whether because it’s too cheap to return a profit or there aren’t yet enough pipelines.
Methane, the main component of natural gas, is a potent greenhouse gas that traps considerably more heat in the atmosphere than carbon dioxide, helping to accelerate climate change. Burned off or vented natural gas in the Permian is projected at a new high of more than 660 million cubic feet per day in June, way up from previous record highs of about 450 million cubic feet a day late last year, according to the Norwegian research firm Rystad Energy.
BP America President Susan Dio said natural gas makes for a great partner with renewable energy as a reliable backup power source, but she argued the methane emissions are the “Achilles’ heel” for gas.
“For us to make this industry viable and attractive for the future, we have got to reduce emissions,” Dio said.
Peter Coleman, chief executive of Australian LNG giant Woodside, was quick to agree.
“The industry really is at a critical juncture,” Coleman said. “We run the risk of being demonized like that other fossil fuel out there called coal.”
Cleaning up its act
Stricter regulations from countries around the world are coming, and the natural gas sector still must do a better job of cleaning up its act, he said.
“Cataclysmic weather events that are climate linked will start to change regulators’ minds once and for all,” Coleman said. “There will be some (companies) that don’t survive the change, but those that do will thrive.”
Regardless, energy demand worldwide will continue to rise for years to come, especially through the growth of the electricity sector. Oil demand may plateau in the years ahead, but crude oil won’t disappear for many decades either.
“We believe that oil and gas is not going to go away anytime soon,” said ConocoPhillips Chief Financial Officer Don Wallette Jr. “The world is thirsty for energy and it’s only going to get thirstier”