Producers have touted natural gas as a key part of the energy transition — as it is a much cleaner energy source than coal — but they face mounting pressure to slash carbon emissions if the industry wants to be seen as part of the solution to global warming.
Although producers and service companies are working to decarbonise gas with carbon capture, electrification and the use of nature-based offsets, its role in the energy transition remains controversial.
The pressure on fossil-fuel producers to change is occurring on multiple fronts. Recently, in just one day, a Dutch court ruled that Shell must cut its emissions by 45% by 2030, Chevron shareholders passed a resolution to cut end-use emissions, and activist group Engine No. 1 secured three seats on ExxonMobil's board.
Scenarios by the International Energy Agency and Rystad Energy for reaching net-zero emissions by 2050 also call for a decrease in demand for natural gas.
Last year, the French government blocked a $7 billion agreement to buy liquefied natural gas from NextDecade, citing concerns that US LNG is not clean enough to help reach Europe’s climate goals, primarily due to flaring in the Permian basin.
The push for decarbonisation of natural gas has accelerated even as major companies launch projects to reduce emissions and remove carbon dioxide from the atmosphere.
Carbon capture and sequestration (CCS) — which stores CO2 underground rather than emitting it into the atmosphere — is viewed as a potential solution that could benefit the gas industry and other sectors that contribute to greenhouse gas emissions.
“You could put on your lens and you can see CO2 everywhere, so it is not just in our industries — it is cement, it is steel, it’s at the wellheads,” said Stan Knez, chief technology officer at Technip Energies, during Upstream’s Technologies for Energy Transformation digital roundtable in May.
US company Venture Global LNG recently announced a planned CCS project at two export plants in Louisiana, with a targeted 500,000 tonnes of carbon stored each year.
Meanwhile, ExxonMobil is planning a massive CCS hub in Houston with capacity to sequester up to 100 million tonnes per annum of carbon by 2040.
Sequestration could prove a key strategy for producers looking to make LNG carbon-neutral. And as Knez pointed out, there are other existing technologies that can be employed to help meet emissions-reduction goals.
But not all emissions can be completely eliminated. In such cases, nature-based carbon offsets can be used to reach carbon neutrality. These include forestation and conservation, which are meant to create sinks to absorb carbon from the atmosphere.
The use of nature-based offsets has raised concerns about the efficacy of the transactions, especially given that many offsets are calculated from emissions estimates, rather than real-time data.
The effort to pitch LNG as a lower carbon energy source is complicated by the additional steps required in its processing and export.
Exporting LNG adds on processes like liquefaction, shipping and regasification that can increase a project's carbon footprint.
“Gas is not a clean fuel and exporting it overseas makes it worse. You’re literally adding additional emissions that have nothing to do with getting energy out of the fuel,” says Tina Swanson, director of the Science Center at the Natural Resources Defense Council.
To remain competitive in the ever-changing energy market, gas producers will continue to face pressure to address such concerns and to develop transparent processes for emissions reductions. The call to action comes from environmental groups, shareholders, consumers and investors.