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News at WGC2018: Tectonic Shifts From Shale

Mark Green

Mark Green
Posted June 27, 2018

There’s no questioning the ascendance of natural gas – especially natural gas from prolific shale plays in the U.S. Our country’s outlook has flipped 180 degrees in less than two decades, from looking to import natural gas from other countries to becoming one of the world’s leading exporters – even as abundant and affordable natural gas has benefited American consumers, helped revitalize domestic manufacturing and chemicals sectors and led the way in lowering U.S. carbon dioxide emissions.

So great are the gains from U.S. shale natural gas, Federal Energy Regulatory Commissioner Rob Powelson suggested that a panel at the World Gas Conference on the “shifting sands” of shale gas could have been titled the “tectonic shifts” brought by natural gas. 

“Tectonic” certainly reflects the size of the “shale gale,” if not its speed. Discussion moderator Marty Durbin, API executive vice president:

“Things have moved very quickly, and I think there’s also a need on the part of the industry, for everybody to know, that this is moving very quickly, and we need to understand that we are every bit the game-changer we were projected to be, but that we’ve also been a very disruptive force … whether you’re talking about disrupting the energy markets. We’ve certainly been more disruptive to the electricity markets, but we’ve disrupted policies as well.”

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(Above: API’s Marty Durbin, far left, leads WGC’s panel on the impacts of shale gas.)

To be clear, when Durbin and others characterize natural gas as a disruptive force, they’re simply referring to the abundant fuel’s ability to completely change existing markets and models. For the U.S., this is a very good thing. Durbin:

“We’ve seen (natural gas) succeed, and the industry has continued to show the ability to produce more at lower costs, lower environmental impact. We now are not only the world’s largest producer of natural gas, we’re now an exporter and becoming a much greater force as far as global energy markets.”

Other speakers talked about growing investments and opportunity stemming from shale natural gas. XTO Energy’s Monte Dobson said parent company ExxonMobil is committed to $20 billion in investments in facilities across the Gulf Coast through 2025. RBN Energy’s Rusty Braziel said shale production has ensure that natural gas no longer is an “island” in the U.S., but a resource with global market implications.

There are challenges. Baker Botts’ Hamish McArdle said a range of economic and environmental barriers hinder shale production in European nations. Powelson, as he has in other high-profile venues, pointed to a lack of sufficient infrastructure, which he said is keeping all parts of the U.S. from fully benefiting from abundant domestic natural gas:

“We just came off another horrific winter event, where customers in the New England market, the 15 million customers in New England, paid some of the highest natural gas costs in the country and they were less than 150 miles from Leidy Hub gas (in Western Pennsylvania). … We have to get that gas to market … [I]t’s a sad commentary where a dispatch has to take place to bring foreign gas into our marketplace, and [where] a region of the country that’s committed to greenhouse gas reductions [is] burning 2 million barrels of oil to keep the lights on.”

API: Hopeful on Trade

API Executive Vice President Marty Durbin said the international trade of U.S. natural gas and oil is critically important for continued domestic investment and production and said the trade association is carefully watching skirmishing between the U.S. and China over tariffs:

“We are hopeful that discussions between the U.S. and China will not impact this incredibly important and growing market in China and other parts of Asia. There’s a bit of tension at the moment, but we remain hopeful that (leaders) recognize how important international flows of trade – and not just in the commodity itself, but we also import quite a bit of products, steel and aluminum … it’s very important to the continued growth and strength of U.S. energy. We tried to define ‘energy dominance’ earlier. We need to make sure our trade policy allows for that.”

Cyber Security – Divergent Views

FERC commissioners Rob Powelson and Neal Chatterjee see the issue of natural gas infrastructure security differently. Chatterjee on Tuesday said he remains concerned that pipelines and other infrastructure are at risk of cyber attack (a concern rebutted in this post). Powelson disagreed. Check the second sentence in this Powelson quote from Wednesday:

“We’re dashing to gas rather quickly. And by the way, we’re doing it with a steadfast commitment to safety and a steadfast commitment to cyber protection.”

DOE Publishes NGLs Primer

The U.S. Energy Department couldn’t have picked a better week to release its 2018 Natural Gas Liquids (NGLs) primer, highlighting the resource potential, especially in the country’s Appalachian region. DOE says projections for ethane production from the Marcellus and Utica shale plays are significantly higher than previously estimated.

This is because natural gas production in the area is growing rapidly, and DOE estimates that by 2050 it will be quadruple 2013 levels. NGLs such as ethane and propane are key feedstocks for the petrochemical industry, used to produce compounds used to manufacture plastics.

Sharing Football (Soccer) Pain

Television monitors showing World Cup soccer matches are very popular at the World Gas Conference. Certainly, a number of attendees have had one eye on the soccer while trying to keep up with conference keynoters. During one session, Klaus Schafer, CEO of German company Uniper, worked through his sorrow over Germany being knocked out of the World Cup by noting that fellow panelists – from countries including Italy, Hungary and Slovakia – had to share his pain because their countries’ teams failed to qualify for the world’s biggest soccer tournament.  

More on WGC2018 from the Energy Tomorrow Twitter feed:

ABOUT THE AUTHOR

Mark Green joined API after a career in newspaper journalism, including 16 years as national editorial writer for The Oklahoman in the paper’s Washington bureau. Mark also was a reporter, copy editor and sports editor. He earned his journalism degree from the University of Oklahoma and master’s in journalism and public affairs from American University. He and his wife Pamela live in Occoquan, Va., where they enjoy their four grandchildren.