Oil and Gas Executives Blast ‘LNG Pause,’ Call Natural Gas a ‘Destination Fuel’

HOUSTON—When U.S. Secretary of Energy Jennifer Granholm addressed oil and gas executives last week at CERAWeek by S&P Global, one of the energy industry’s largest conferences, the response was tepid, at best.

“You can applaud that,” a seemingly exasperated Granholm told a demur crowd of hundreds seated to a white tablecloth luncheon at the Hilton-Americas ballroom in downtown Houston after she highlighted record low unemployment, which she attributed to federal policies that made the U.S. “irresistible for clean energy investment.”

The crowd’s lukewarm response likely had less to do with her championing of renewable energy incentives and more to do with a recently announced “pause” on new U.S. Liquified Natural Gas (LNG) export terminals or expansions.

On January 26, the Department of Energy temporarily paused the approval of new LNG export capacity while assessing the environmental and economic impacts of additional exports.

The oil and gas industry describes natural gas as a clean burning fuel, emitting only about half as much carbon dioxide as coal when burned. However, methane, the primary component of natural gas, is more than 80 times more potent as a greenhouse gas than carbon dioxide over the first 20 years after its release into the atmosphere.

Leaks and intentional venting from wells and other infrastructure make the oil and gas sector the second largest U.S. source of methane emissions related to human activity after agriculture. The International Energy Agency estimates that fossil fuel operations have the highest potential for major reductions in methane emissions in the near term and can reduce two-thirds of their emissions at low—or even negative—cost.  

Methane releases tied to human activity will “warm the planet as much in the next ten years as the CO2 from burning all the fossil fuels planetwide,” said Fred Krupp, president of the Environmental Defense Fund (EDF). “While we’re driving down CO2 emissions as fast as we can, we can get an immediate reduction in temperatures from what we would otherwise see by driving down methane emissions.”

The United States, fueled by an ongoing fracking boom, is currently the world’s largest LNG exporter. New U.S. export terminals and expansions of existing terminals currently under construction will nearly double this capacity in the coming years. The Department of Energy has approved additional new capacity that, if built, would result in more than a tripling of current export volumes.

None of these proposed expansions are subject to the current pause, which would only affect new projects that haven’t yet received federal approval, Granholm said.

The assessment was part of what Granholm described as “an undeniable, inevitable and necessary realignment of the world’s energy system” away from fossil fuels.

Granholm gave her keynote address on March 18, the first day of CERAWeek, kicking off a week-long conversation on the LNG pause by executives who were overwhelmingly opposed to the action.

“I think this decision was incredibly misguided,” Toby Rice, president and chief executive officer of EQT Corporation, the largest U.S. natural gas producer, told those assembled at the energy conference. “This needs to be ended today.”

Michael Smith, chief executive officer of Freeport LNG Development, a leading U.S. liquified natural gas exporter, agreed.

“It’s a bad policy and it sends a terrible message to the world,” Smith said.

For more than a decade, natural gas has been portrayed by industry executives and some politicians as a bridge fuel or “transition fuel” as the world shifts to cleaner, renewable energy alternatives.

Delegates from around the world agreed to transition away from fossil fuels at COP28, the U.N. climate conference held in Dubai in December. The following month, United Nations Secretary-General Antonio Guterres said the phase-out of fossil fuels is “essential and inevitable to avoid a global climate catastrophe.”

However, Clay Neff, president of international exploration and production for Chevron, doubled down on the future of natural gas.  

“It’s not just a transition fuel,” Neff said. “We look at it as being a destination fuel for decades to come.”

Amin Nasser, chief executive of Saudi Aramco, the national oil company of Saudi Arabia, went further, saying “we should abandon [the] fantasy of phasing out oil and gas.”

A common refrain heard in the halls in Houston was that if the U.S. didn’t continue to ramp up LNG exports, other countries, with higher methane emissions, would.

Michael Sabel, chief executive officer for Venture Global LNG, another leading U.S. LNG exporter, noted that Qatar has already responded to the U.S. pause with announcements of their own increased export capacity.  

“U.S. gas production is roughly twice as clean from a methane emissions standpoint than those other markets,” Sabel said.

Andrew Baxter, an energy transition senior director with EDF, challenged that claim.

“No one has done a methane emissions science study or observations of Qatar to my knowledge,” Baxter told Inside Climate News. “I think a lot of these assertions are just petty sound bites that sound good, but they’re not based on any reality.’

Further, methane reduction targets set by international oil companies, with the exception of Chevron, do not include emissions from joint ventures with national oil companies, according to a report released by EDF at CERAWeek. Such joint ventures account for roughly half of international oil companies’ total production.

“The climate commitments of the Western IOCs [international oil companies] only extend to their operated production,” Baxter, the report’s lead author, said. “The other 50 percent of their equity production is off the books.”

Another common refrain was that increasing LNG exports helps address climate change because it allows developing countries to reduce their dependence on coal.  

“We take clean burning U.S. natural gas and displace coal and fuel oil around the world,” Smith, of Freeport LNG, said. “Anybody who thinks that that isn’t good for the environment, here in Houston or in the Northeast or in any other blue state, doesn’t understand their science.”

However, recent peer reviewed studies published in leading science journals show the opposite is true.

“Long-term planned LNG expansion is not compatible with the Paris climate targets of 1.5 °C and 2 °C,” according to a 2022 study in Environmental Research Letters.

The study found that methane emissions from the gas sector “play an important role in the climate impact of LNG.”

A study published earlier this month in the journal Nature found actual methane emissions from the U.S. oil and gas sector were three times higher than the official government inventory, an estimate based in part on industry data.

The study was based on aerial surveys that included nearly 1 million measurements of methane emissions from well sites and other gas infrastructure, making it one of the most comprehensive assessments of methane leakage and venting from the gas sector ever conducted.

The emissions represent an annual loss of $1 billion in commercial gas value plus an additional $9.3 billion in annual social cost as determined by the U.S. Environmental Protection Agency, according to the study.

Community members affected by industrial pollution and environmental injustice staged a “die-in” protest and “funeral march” outside of CERAWeek on March 19, the second day of the five day conference.

Louisiana Attorney General Liz Murrill and the attorneys general of 15 other states filed a lawsuit against President Joe Biden and the United States Department of Energy over the pause on new LNG export terminal permits on March 21.

The following day, the Louisiana Bucket Brigade, an environmental organization based in New Orleans, called on Louisiana governor Jeff Landry to sue LNG export companies for damages to Louisiana fishermen. 

As Sec. Granholm addressed the subdued oil and gas executives gathered before her, she acknowledged the challenge their industry faced in addressing climate change and urged them to rise to the occasion.

“I know there are some, maybe in this room, who would prefer to wait and see or to maybe push the burden of tackling climate change onto others,” Granholm said. “But let’s be clear; consumers are calling for change. Communities are calling for change. Investors are calling for change.”

“It is a once in a lifetime challenge and a once in a lifetime opportunity,” she added. “Fortune tends to favor those who treat those two things as one in the same.”