On the eve of WGC 2018, Upstream surveyed a number of leading figures in the international gas industry on topical issues shaping the sector.
BP upstream chief executive Bernard Looney responded
Upstream: How do you see the prospects for the gas sector over the coming decade and beyond?
Bernard Looney: I believe natural gas has a huge part to play in the future of energy. It is abundant, flexible and critical in the transition to a lower carbon economy.
Gas produces half the greenhouse gas emissions of coal when burned for power, as well as providing ideal back-up for renewables, as it can quickly be brought online when there is less sunshine or wind.
We have already seen gas replacing coal in power and emissions falling as a result in the US, UK and many other countries.
China is ramping up gas to help curb emissions, with a 15% rise in gas consumption last year.
Indeed, the BP Statistical Review of World Energy shows that 2017 was a bumper year for gas globally, with a 3% rise in consumption, higher than oil or coal.
Based on recent trends, we project average growth of 1.6% per year in gas demand to 2040 — more than the growth of oil and coal together.
Upstream: How big a part does the gas sector play in your business and how has that changed in recent years. Do you see the role of gas in your business gaining in importance over the years ahead?
Bernard Looney: Gas plays a major part in BP’s business.
We have Upstream gas production operations around the world, including giant fields such as Shah Deniz in Azerbaijan, Tangguh in Indonesia and Khazzan in Oman.
We distribute gas through pipelines and our growing liquefied natural gas business. And we are also a major gas marketer — number one in the US.
Some projects span the supply chain, such as the Southern Gas Corridor, which is due to deliver 16 billion cubic metres of natural gas each year from Shah Deniz in the Caspian Sea through 3500 kilometres of pipelines to customers in Georgia and Turkey in 2018, and in countries as far away as Greece, Bulgaria and Italy from 2020.
Upstream: How important a role will LNG play both for your company itself and the industry in general over the years ahead?
Bernard Looney: LNG will be increasingly important. LNG trade grew 10% last year, with China accounting for half of the growth in demand.
LNG can go anywhere in the world and that is helping to create a more global gas market. In BP we operate liquefication plants in Trinidad & Tobago and in Indonesia and we trade LNG worldwide. We supply LNG to China and helped build the country’s first LNG import terminal.
Upstream: If you are a producer what percentage of your output is gas today? How has that changed in the past decade and how do you expect it to develop in the years ahead?
Bernard Looney: Gas already accounts for almost half of our production and the proportion is expected to increase to around 60% by the mid-2020s.
Since 2015, 11 out of 16 major project start-ups were gas producing ones, as will be 13 of the 22 planned out to 2021.
Upstream: What are the main challenges that the gas sector faces?
Bernard Looney: One of the biggest challenges is connecting supply to demand. The world has abundant gas resources and high demand, but not in the same places. Where demand is soaring, in China for example, the challenge is to create the infrastructure needed to bring gas to customers.
Another issue is that of methane emissions in production, which can limit the life-cycle environmental benefits of gas.
Methane has a shorter lifetime in the atmosphere than carbon dioxide, but it has a higher global warming potential, so reducing emissions today can have a more immediate positive effect. Hence the industry’s drive to lower these emissions.
Upstream: How can governments help to further encourage the exploitation of gas?
Bernard Looney: Governments can ensure that markets are open and interconnected. They can support infrastructure. Putting a price on carbon, through tax or trading systems, and incentivising lower-carbon options for consumers and industry — and that includes gas in place of coal.
Upstream: Can the industry persuade public opinion that gas is part of the solution for the energy transition rather than part of the ‘fossil fuel’ problem? If so, what more should be done by the industry to try and win that argument?
Bernard Looney: Gas replacing coal in power has already helped cut emissions dramatically in countries such as the US and UK.
Gas is an ideal and versatile partner for renewables. Gas is abundant and so is good for meeting rising demand affordably and sustainably, with increasing decarbonisation.
We need to make sure these powerful arguments about the unique qualities of gas keep getting voiced and heard, and the World Gas Conference is a great opportunity to do that.
We also need to show we understand that for gas to fulfil its potential we need to crack down on methane emissions — and we are accelerating our action on that right now.
Upstream: What is your company currently doing to control emissions and what more do you plan to do?
Bernard Looney: Earlier this year we announced new measures to reduce emissions in our operations, improve products and create low-carbon businesses.
The targets include methane intensity (methane emissions from operations where gas goes to market as a percentage of the gas) of 0.2%.
Steps we are taking to reach our target includes designing out emissions in new facilities such as Khazzan in Oman where we have a central facility instead of multiple wellheads and reducing emissions in established operations such as US onshore gas fields, where we pioneered a technique called ‘green completions’ where gas is captured instead of being vented.
We are also making advances in detecting methane emissions including using infrared cameras in combination with software.