April 2021, Vol. 248, No. 4


Gas Industry Highlighting Its Own ‘Greener’ Alternatives

By Richard NemecContributing Editor  

On Valentine’s Day, the Los Angeles Times published a full-page feature on clean energy that cited a number of other states that are keeping a close eye on California and its aggressive climate change mitigation measures, including the goal of eliminating fossil fuel use in the state by 2050.   

The reporter, Sammy Roth, quoted various energy and environmental stakeholders in the state that were pessimistic about California’s chances of meeting its goals. They reasoned that not enough was being done currently or planned to be done in the next few years, to ever hope to hit the long-term target.  

That same day, Microsoft co-founder and billionaire global philanthropist Bill Gates was telling the CNN television network’s Jake Tapper that winning the fight against climate change will require a historic national and international effort to unearth innovations in how mankind lives and works. Gates said he is an optimist, but he acknowledges this is a challenge like none other for humankind.  

The stakes are high in states like California. For the gas industry, they are huge, considering that direct gas consumption by residential and commercial buildings amounted to about 8.45 Tcf (293 Bcm) in 2018, rivaling the 10.63 Tcf (301 Bcm) used by generators to power the grid, according to the U.S. Energy Information Administration (EIA).  

Nevertheless, the cries for phasing our fossil fuel use are picking up momentum, supported by many of the national environmental groups, such as the Natural Resources Defense Council (NRDC), that previously touted gas as a bridge fuel.  

In Oregon, the major gas utility, NW Natural, serves about 74% of the residential square footage in its territory, and it provides 90% of its heating and water heating customers’ needs on the coldest days. Nevertheless, the greenhouse gas (GHG) emissions associated with that gas delivery are only about 6% of the state’s overall total.  

“The science makes clear that we must shift away from oil, gas and coal toward cleaner ways to power our future,” said NRDC spokesperson Kari Birdseye, stressing that this needs to happen as quickly as possible.   

NRDC is recommending that carbon pollution be cut by reducing the amount of fossil fuels in half by 2030, and “stop adding it to the atmosphere altogether by 2050 to avoid the worst impacts of climate change.”  

A growing recognition is seeping out of the industry that the dump-fossil-fuels campaign isn’t going away, and oil and gas operators must take responsibility for their carbon footprints. From global majors to local gas distribution companies (LDC), the oil patch is thinking a lot more about alternative energy and renewables.   

Gas trade associations are touting the role natural gas has played in lowering GHG emissions the past 30 years and pointing to renewable natural gas (RNG) and green hydrogen as being integral parts of the nation’s gas pipeline network later in this century.   

In fact, at the end of February, NW Natural CEO David Anderson turned a quarterly earning conference call into a mini symposium on RNG and hydrogen, saying they are part of the industry’s road to carbon neutrality.  

One of Chevron Corp.’s latest LNG contracts inked Feb. 22 calls for Pavilion Energy Trading & Supply Pte. Ltd. to include with each delivery a statement about the shipment’s GHG emission equivalent as measured from the wellhead to the import terminal, similar to a deal signed in late 2020 by Qatar Petroleum with Singapore-based Pavilion. Chevron’s supply deal is for six years with 500,000 metric tons annually of LNG.  

In another recent move toward more alternatives to fossil fuels, Chevron expanded a partnership with Brightmark LLC to accelerate the development of more dairy-based biomethane production as the basis for stepped-up RNG supplies.   

“Working with Brightmark to add new projects underpins our commitment to supplying the world with affordable, reliable and ever-cleaner energy,” said Andy Walz, president of Chevron’s Americas Fuels & Lubricants. “It’s an exciting time for Chevron as we continue to help advance the energy transition and help industries and consumers that use our products build a lower carbon future.”  

In February, the Dallas-based interstate energy pipeline developer/operator, Energy Transfer (ET), created a new alternative energy group within the company, headed by General Counsel Tom Mason, with the express goal of working to reduce ET’s carbon footprint.   

ET is one of the nation’s largest pipeline operators, boasting more than 90,000 miles (145,000 km) of liquid and gas pipelines crossing 38 states. In the past 10 years, ET has reduced its carbon emissions by updating its compressors.   

An example of these efforts is the installation of a Dual Drive Compression system along some of its natural gas pipelines. Each Dual Drive compressor unit has patented technology that provides the ability to switch back and forth between an electric motor and a natural gas engine to manage changes in electrical demand due to high peaks or extreme weather conditions.   

“In 2020 alone, this Dual Drive Technology reduced Energy Transfer’s carbon dioxide emissions by over 632,000 tons,” a Dallas-based spokesperson said.  

The natural gas LDCs’ Washington, D.C.-based trade group, the American Gas Association (AGA), takes an offensive stance in the face of anti-fossil fuel campaigns, noting that U.S. natural gas has led efforts to reduce GHG emissions. It characterizes the U.S. gas delivery system as increasingly an enabler of combating climate change with the integration of RNG into the system.  

“The use of natural gas, in combination with renewable energy and efficiency programs, has contributed to the U.S. energy-related carbon dioxide (CO2) emissions declining to their lowest levels in nearly 25 years,” said AGA’s spokesperson Jake Rubin.  

Meanwhile, three southern states have shifted their regulatory policies to encourage low-CO2 power generation to support statewide climate change mitigation plans. Virginia last year enacted a state Clean Economy Act, and state regulators decided that the plans of the largest utility, Dominion Energy, failed to adhere to the new climate change initiative. Virginia’s Corporation Commission found Dominion’s new power plans to be “unreasonable” and “not in the public interest.”  

Similarly, in South Carolina, state regulators rejected Dominion’s plans as insufficient. The utility plans failed to meet the requirements of the state’s 2019 Energy Freedom Act. And in Mississippi, state regulators required the Southern Co.-owned Mississippi Power Co. to remove about 1 GW of power from aging coal and gas plants as “excess electricity” on its system. The idea was to lower the overall CO2 levels in its generation mix.  

Threats to long-term fossil fuel use don’t come only from activist “keep-it-in-the-ground”-type organizations or the Biden administration. States and industry titans, themselves, are part of the trend. In Oregon, NW Natural has been negotiating with the city of Eugene for several years on a “voluntary and collaborative agreement” to help reduce emissions and invest in the city’s climate action plan goals.  

NW Natural is attempting to pre-empt the city, imposing bans on the use of natural gas in new buildings as has become fashionable in states focused on climate impacts. The Eugene Water and Electricity Board (EWEB) is part of the discussions.  

“Our system is uniquely positioned to convert waste into home-grown energy with RNG and renewable [green] hydrogen,” said NW Natural’s spokesperson Melissa Moore, citing ongoing projects in Eugene to develop renewable natural gas from the operations of Eugene’s wastewater treatment plant and to pursue a first-of-its-kind renewable hydrogen facility in the city that is home to the University of Oregon. “Using natural gas infrastructure already in place – one of the tightest, newest pipeline networks in the nation – can help reach climate goals more affordably, without sacrificing reliability.”   

Elsewhere, state legislatures are taking the initiative to outlaw gas bans in the name of protecting customer choice. At least four states – Arizona, Louisiana, Oklahoma and Tennessee – took this step last year, and others are making noises about following suit this year. Arizona House Bill (HB) 2686 in August 2020 was passed by the state legislature, reserving gas utility regulation to the state and prohibiting local building codes from restricting natural gas.  

Las Vegas-based Southwest Gas Corp. supported HB 2686, while the state’s major electric utility, Arizona Public Service Co., remained neutral on the measure. Southwest Gas’ Public Affairs Director Scott Leedom notes that the new law “doesn’t pick winners and losers,” it allows gas to be included in new construction and protects customer choice.   

Gas continues to play a major role in economic development in Arizona where Republican Gov. Doug Ducey has sought to diversify the state’s economy from overreliance on tourism and affordable housing.  

Environmental groups, such as NRDC and the Environmental Defense Fund (EDF), among others, contend that all parts of the American landscape must be included in the climate change mitigation efforts; therefore, federal ocean waters and onshore public lands must curtail their role in fossil fuel development.  

“We’re opposed to policies that lock future generations into fossil fuel dependence, and we don’t support expanded drillings on federal lands,” said NRDC spokesperson Kari Birdseye.  

NRDC officials emphasize that they are not calling for a national ban on hydraulic fracturing (fracking); instead, they support the right of states and local communities to ban the practice. The organization is supporting recently proposed legislation in California – Senate Bill (SB) 467 – that would ban fracking and mandate setbacks of 2,500 feet (760 meters) from oil and gas activities statewide. NRDC also supported an earlier fracking ban in New York state.  

“We have helped communities protect themselves from the damage and risk of fracking, and we support measures to reduce more broadly the risks of what are inherently harmful and hazardous operations that pose near-term and ongoing threats to the environment and public health,” NRDC proclaimed. In California this past year, the oil and gas division has redefined its role as focused on the environment and public health, along with the traditional safety oversight role.  

Nevertheless, in the past decade, the United States has become the undisputed world leader in oil and natural gas production while also leading the world in GHG emissions reductions.   

“We don’t have to choose between environmental progress and access to affordable, reliable energy,” said Reid Porter, spokesperson for the American Petroleum Institute (API).   

He said oil and gas will be part of the world’s energy mix for decades to come. “And that energy should be produced here in the United States with the highest environmental standards around the globe,” he said.  

Porter and API cite the U.S. Energy Information Administration (EIA) and the International Energy Association (IEA) to counter the anti-fossil fuel advocates who try to make their arguments just as compelling.   

While giving plenty of shout-outs to renewables, the EIA 2021 Outlook through 2050 clearly makes the case that U.S. oil and natural gas production will continue to be from major domestic and global sources. “Petroleum and other liquids remain the most-consumed fuel in the Outlook’s reference case,” EIA’s report noted.  

According to IEA global statistics, the United States has led the world in overall CO2 emissions reductions since 2000, aided by a large drop in the use of coal for power generation, which has canceled out periodic annual increases in emissions from oil and gas activity.   

“A 15% reduction in the use of coal for power generation underpinned the decline in overall US emissions in 2019,” IEA’s report stated last year. “Coal-fired power plants faced even stronger competition from natural gas-fired generation, with benchmark gas prices at an average of 45% lower [in 2019] than 2018 levels.  

“Economic growth in advanced economies averaged 1.7% in 2019, but total energy-related CO2 emissions fell by 3.2%. The power sector led the decline and now accounts for 36% of energy-related emissions across advanced economies, down from a high of 42% in 2012.”  

API commissioned a study that was released last September, concluding that the U.S. CO2 emissions could increase by millions of metric tons over the next decade if domestic federal land production of oil and gas is banned. From the perspective of the API study, oil imports to the United States increase and LNG exports decrease to a net detriment.   

Following suit, cost increases, along with more coal use and CO2 emission increases, will result, the study by OnLocation Inc. indicates. It concludes that the energy security, economic and environmental adverse impacts outweigh the benefits of banning fossil fuels on federal lands.  

OnLocation analysts said their study is aimed at “projecting the impact that stopping leasing and development on federal lands and offshore would have on oil and gas production, energy prices, the economy, employment and the American consumer.”    

By modifying assumptions going into the EIA’s National Energy Modeling System (NEMS), which they call a well-known and vetted model, they hope to develop an objective assessment of the potential impacts on the United States.  

As has played out in California, public health has become part of the drive away from fossil fuels, and environmental groups like the Center for Biological Diversity cite a recent Harvard and UK university study that found that 34,000 premature deaths occurred in California in a single year due to fossil fuel pollution.   

Globally, more than 8 million people died in 2018 from fossil fuel pollution, significantly higher than previous research suggested, according to the findings from Harvard in collaboration with the University of Birmingham, the University of Leicester and University College London. Researchers estimated that exposure to particulate matter from fossil fuel emissions accounted for 18% of total global deaths in 2018.  

In the lower 48 United States, with the world’s most extensive gas pipeline network, gas industry operators have taken to heart the fact that anti-fossil fuel sentiment is real and entrenched.   

On numerous earnings conference calls this winter, gas utility executives were outlining their strategies for decarbonization. Portland, Ore.-based NW Natural’s Anderson, who is chairing AGA this year, told analysts at the end of February that heavily saturated residential gas use accounted for only 6% of the state’s GHG emissions.  

“In the Pacific Northwest, the natural gas system delivers about twice as much energy during peak loads than does the region’s electric system,” Anderson said. “This positions us well to drive decarbonization in the region in a way that assures reliability and affordability.”    

The existing gas infrastructure longer term is a “huge advantage,” according to Anderson, citing storage as one example. “The natural gas infrastructure is built to provide long-duration storage that doesn’t degrade. We could store RNG and hydrogen today in existing facilities.  

“When you think of decarbonization strategies across the nation’s energy infrastructure, the fact that the gas infrastructure already exists and has significant cost advantages is incredibly important.” He cited the example of NW Natural’s 20 Bcf of storage as the equivalent of storing 6 million MWh of renewables. “At today’s costs, that would be about a $2 trillion lithium battery.”  

What’s needed, the Texas native Anderson said, are government policies allowing existing infrastructure to be used in new ways along with an acceleration of gas industry decarbonization efforts.    

Richard Nemec is P&GJ’s Los Angeles-based contributing editor. He can be reached at rnemec@ca.rr.com.  

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