Saturday, December 9, 2023

Leading U.S. Natural Gas Firms Sound Rallying Cry For Permit Reform, Lawsuit Limits – Natural Gas Intelligence

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Demand endures. Supply is abundant. Technology to produce it efficiently continues to advance.

But the United States needs to meaningfully expand its natural gas production and delivery infrastructure to meet domestic needs while supporting increasing global demand for American exports of LNG and fuels of the future such as hydrogen. To make this happen, the pipeline permitting process, in particular, must be reformed.

Such was the drumbeat from a parade of executives Wednesday at CERAWeek by S&P Global in Houston.

[Mexico Matters: Cross-border energy trade between the U.S. and Mexico reached $42 billion last year. Understand this burgeoning trade flow — the projects, politics and natural gas prices — with NGI’s Mexico Gas Price Index. Know more.]

Regulatory hurdles and often flimsy legal challenges are holding up needed projects, in some cases for years, said Williams’ Chad Zamarin, executive vice president of corporate strategic development. He noted the Mountain Valley Pipeline (MVP) project, eight years in the making and still facing an uncertain finish line, as a key example. It is mired in exhaustive regulatory scrutiny and lawsuits that claim it would do more harm to the environment than good for the flow of energy.

“The challenge that we have is the infrastructure,” Zamarin said. “We’ve got to get back to building.”

Despite the criticism of MVP, he said an estimated 60% of emission reductions in the United States over the past 15 years is because of increased use of natural gas, a cleaner source of energy than coal and other legacy fossil fuels.

“So it’s not just a theory,” Zamarin said. “We’ve proven that natural gas is an incredibly powerful decarbonization tool. That’s a fact.”

He joined colleagues in calling on Congress to pass permitting reform legislation that would set reasonable but firm time limits on infrastructure project reviews. Advocates for change also want lawmakers to require legal challenges to demonstrate they have evidence of potential problems in order to proceed in the courts. Otherwise, even frivolous suits can get “you caught up in the courts forever,” Zamarin said.

Colleagues amplified those concerns.

“We don’t lack resources; the problem is access” to pipelines needed to get gas both to domestic demand destinations and liquefied natural gas export plants on the Gulf Coast, said Chesapeake Energy COO Josh Viets.

Cheniere Energy Inc.’s Scott Culberson, senior vice president of gas supply, said upgrades and new pipelines are in urgent need for LNG, in particular, given that a spate of new export facilities are slated to come online in the second half of this decade to meet robust global demand. Russia’s war in Ukraine accelerated European calls for U.S. gas, while rapidly growing populations and modernizing economies across Asia are expected to drive long-term demand.

‘Tremendous’ Future Growth

“There’s still a tremendous amount of growth ahead,” Culberson said.

In addition to LNG needs, without more infrastructure, gas can pile up in some regions because of takeaway limits. Meanwhile, other areas of the country would starve for supplies because needed conduits are scarce.

Prices in West Texas, for example, briefly flipped negative last year and remained under pressure early in 2023 when maintenance work in the region backed up supplies and caused a glut. At the same time, prices in the West, including California, soared because that part of the country relies on gas from the Permian Basin that, while abundant, often cannot get efficiently delivered because of pipeline limits.

The American Petroleum Institute (API) said that, in addition to natural gas, major renewable energy projects in coming years may face delays without reform to address regulatory mazes and dubious legal threats. Much has been made of the need for renewable fuels to power the future – including hydrogen – but these, too, need delivery conduits. New pipelines could prove the infrastructure needed for natural gas now and other fuels in the future, said API’s Dustin Meyer, vice president of natural gas markets.

All of that noted, he said lawmakers on both sides of the political aisle in the nation’s capital are increasingly embracing the need for a future with natural gas at the core of the energy mix. This developed in the wake of Russia’s war and the supply crisis in Europe that it quickly caused last year.

“The narrative has shifted considerably over the last year…to a greater recognition, now more than ever, of natural gas,” Meyer said. The dialogue among lawmakers and natural gas lobbyists is “very constructive” and could open the door for more pipeline projects.

The wildcard looming over Washington and the industry is whether the United States can update and expand its infrastructure to deliver gas where it’s needed before new rounds of energy shortages emerge, said EQT Corp. CEO Toby Rice.

“We’re not asking the government for a dime,” said Rice, who leads the largest natural gas producer in North America.

The industry, he said, simply needs lawmakers to pave new paths for pipelines and other critical infrastructure in the near term.

“The market right now is broken,” Rice said. But with key pipeline expansions, “the opportunity for American natural gas is tremendous…and it’s the biggest energy security blanket we can provide for the world.”

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