Opinion: LNG is key to reducing global warming
The spectacular growth of U.S. exports of liquefied natural gas is going to do more than increase employment, trade and geopolitical benefits. It is also likely to reduce greenhouse-gas emissions, in ways we would not expect.
As oil companies struggle to stop the rise in methane emissions from the flaring of natural gas associated with oil production, they are investing in pipelines to transport the natural gas from shale fields in the Permian Basin to new LNG terminals on the Gulf Coast. This combination of advantages is drawing growing interest because of the role it could play in reducing global warming.
The era in which oil producers routinely flared natural gas to keep more profitable oil wells in production is ending. In 2017, Permian oil and gas producers burned enough gas to serve all the heating and cooking needs of Texas’ seven largest cities. That’s $322 million of natural gas that went up in smoke. Today, producers have more options, and by selling the natural gas and reducing flaring, they can increase profits and environmental benefits.
And, in light of the current political debate, and contrary to conventional wisdom, oil and gas companies also know they need to manage the implications of a new world of climate action. Methane is an important bellwether because reducing methane emissions from oil and gas operations is easier and less costly than controlling carbon but no less important.
Methane is the primary component of natural gas. While methane doesn’t stay in the atmosphere as long as carbon dioxide, it is initially far more of a problem, however. In the first two decades after its release, methane is 84 times more potent than carbon dioxide.
The oil and gas industry accounts for about a third of U.S. methane emissions. Several major oil companies, including Shell, BP and Exxon, have made reducing methane emissions one of their top environmental priorities.
What’s helping is that LNG companies want to become an outlet for the record amount of methane being flared in the giant Permian Basin of West Texas and Eastern New Mexico, where much of it has been burned off due to a lack of pipelines needed to move it to the Gulf Coast. Now, Houston pipeline operator Kinder Morgan is building two pipelines, the first of which, the Gulf Coast Express Pipeline, is expected to begin moving 2 billion cubic feet of natural gas a day in October. The second pipeline, the Permian Highway Pipeline, will transport another 2 billion cubic feet a day to the Gulf Coast the following year.
An increase in pipeline capacity would bolster pipeline shipments of gas to Mexico but most of the gas would be set aside for LNG exports. By the end of this year, U.S. LNG capacity is expected to reach 9.6 billion cubic feet per day, making America the third-largest LNG exporter in the world, after Qatar and Australia.
The biggest customer for U.S. LNG is expected to be China, which wants to use clean-burning natural gas instead of coal for electricity generation. Thanks to LNG, possibly profound changes are taking place right now.
Perry is a scholar at the American Enterprise Institute and professor of economics at the Flint campus of the University of Michigan. He wrote this for InsideSources.com.