Natural Gas Keynote GasTech

Thank you, John [Defterios] for your introduction and for inviting me to speak today.

I appreciate the opportunity to join you this afternoon and share what we see as important pathways toward a sustainable future for natural gas.

In recent years, natural gas has played a vital domestic and global economic and energy security role. Just over a decade ago, the U.S. was poised to become a major natural gas importer.

In the intervening years, unprecedented growth in domestic natural gas production has transformed America’s energy prospects, ensuring low-cost energy for households, businesses and industry here at home, while enabling expanding U.S. liquefied natural gas exports to our partners and allies abroad.

Expanding LNG Exports

Starting from zero LNG exports in 2015, the U.S. has become the largest producer and exporter of natural gas in the world just 10 years later. U.S. natural gas export volumes and the destination flexibility of those exports have made a crucial difference in helping our European and other allies meet near-term energy needs and safeguarding their economic and political stability following Russia’s invasion of Ukraine and the loss of Russian supply to the market.

Today, we are exporting more LNG than any other country, and we expect our exports to more than double by the end of this decade, once all of the projects currently under construction is complete.

In addition to this doubling of supply by 2030, there are several other projects authorized for exports that are not yet under construction.

With our current export capacity, plus future additions coming online, we will be able to continue to supply our allies and key trading partners.

The Climate Challenge

With the privilege of being the largest producer and exporter of natural gas comes great responsibility. It is imperative that we reconcile our role as natural gas producer and exporter with achieving net-zero greenhouse gas emissions economywide by midcentury.

The credibility and long-term viability of the natural gas industry – both in the US and globally – hinges on meeting this challenge. It is no longer sufficient to assert that natural gas will displace more greenhouse gas-intensive fuels like coal and oil. Industry must demonstrate through concrete actions a credible pathway that puts natural gas firmly on a trajectory to net-zero emissions by 2050.

Three things are central to that path forward: one, reducing oil and gas sector methane emissions to near zero across the global supply chain by 2030; two, rapidly deploying decarbonization technologies and infrastructure, especially carbon capture and storage; and, three, laying the foundation for low-carbon ammonia and hydrogen produced from natural gas with carbon capture and other low- and zero-carbon resources.

From Europe to Asia, customers and governments in importing countries have begun to demand lower emissions natural gas exports and a decarbonized natural gas value chain. And citizens and stakeholders around the world are calling for more fundamental action, especially younger generations who increasingly see climate change as an existential threat.

Fortunately, we have a portfolio of solutions available to us, and one need only look at the shale revolution to appreciate the enormous capacity of the industry to harness innovation and to invest in new business models at very large scale and in very short timeframes.

Reducing Methane Emissions

Let me turn first to reducing methane emissions, our most urgent and most solvable climate challenge confronting the industry. Tools available today can get us much of the way toward near zero-emissions of methane by 2030, a commitment made at last year’s global climate conference in Dubai by over 50 oil and gas companies representing over 40 percent of the world’s production.

Here in the United States, the Department of Energy and other agencies are leveraging the resources provided by the Inflation Reduction Act and the Bipartisan Infrastructure Law to help industry achieve that goal. 

Using IRA funds, DOE and the Environmental Protection Agency have awarded up to $350 million to 14 states to help identify and plug marginally-producing, high methane-emitting wells. We have also announced another $850 million for projects that will help monitor, measure, quantify, and reduce methane emissions from the oil and gas sector. EPA will complement this direct funding with implementation of methane waste emissions charge to drive further reductions over time.

In addition, our Office of Fossil Energy and Carbon Management at DOE is providing tens of millions of dollars annually for methane monitoring and mitigation technologies. This includes development of integrated networks of surface-based, aerial and satellite technologies for accurate and timely detection and monitoring of methane emissions and advanced technologies for reducing and ultimately eliminating natural gas flaring.

Internationally, we are also working to promote the development of a natural gas market in which buyers can confidently demand, and producers can credibly supply, natural gas with a lower methane and carbon dioxide emissions profile. The goal is to foster a global market that rewards continuous reductions in the emissions intensity of natural gas over time.

We simply cannot solve a problem, if we cannot agree on how to measure it. Amidst the confusion of multiple private and public sector efforts to measure methane and carbon dioxide emissions associated with the natural gas supply chain, there is currently no global consensus regarding expectations that purchasers, regulators, and other stakeholders should have for companies making claims about the greenhouse gas intensity of delivered or contracted gas.

Since last year we have been supporting a work group of 19 natural gas importing and exporting countries, plus the European Commission and the East Mediterranean Gas Forum, to develop a shared approach to providing comparable and reliable information regarding supply chain greenhouse gas emissions from different suppliers across the global market – in short an agreed global framework for measurement, monitoring, reporting and verification, or MMRV.

Our technical subgroups are on track to have important elements of this framework ready early next year for what we hope will become a voluntary global framework for MMRV in the 2025-2026 timeframe.

We appreciate the support of the natural gas industry and other stakeholders around the world for development of a system that will allow the natural gas industry to monetize its investments in emissions reductions in the marketplace by demonstrating improved greenhouse gas performance accurately, consistently and credibly, and on a level playing field with other suppliers.

Decarbonizing Natural Gas Production and Use

Reducing supply chain methane and CO2 emissions is vital in the near term, but ultimately insufficient. To reach net-zero emissions economywide by 2050, we must deploy carbon capture, removal, use and storage on an unprecedented scale.  

Thanks to decades of research, development and commercial-scale demonstration and partnerships with the private sector—including many companies and organizations here today—the U.S. and other countries have achieved important advances in carbon management.

Today, technologies and infrastructure are substantially deployed at scale across multiple industries and countries, with over 40 commercial-scale carbon capture projects operating world-wide -- including 18 in the United States.

Now, for the first time, we have the policy and funding support in place in the U.S. to begin deploying carbon management at a level commensurate with our emissions reduction goals—in other words, deployment at climate scale.

The Bipartisan Infrastructure Law provides roughly $15 billion for demonstration and deployment of carbon management technologies and infrastructure over 5 years, and the Inflation Reduction Act provides a wide range of tax credits representing hundreds of billions of dollars in incentive value. Some of these tax credits are available for an unprecedented ten years to any eligible project beginning construction by the end of 2032, providing industry a full decade to plan and invest.

The reformed 45Q tax credit in the Inflation Reduction Act has the potential to mobilize tens of billions of dollars or more of private investment in carbon capture, direct air capture, and associated CO2 transport and storage projects. And the Front-End Engineering Design, or FEED studies, that we are supporting with infrastructure funding will help make an investment case for carbon management projects that can then claim the expanded 45Q tax credit to achieve commercial viability.

Ultimately, improvements to 45Q provide greater investment certainty and more attractive economics, especially for projects with lower costs of capture, such as gas processing, ethanol, ammonia and hydrogen production. As a result, many more carbon management projects can now move forward without DOE funding, helping to create economies of scale and reduced costs for building out shared CO2 transport and storage hubs.

We are already seeing a powerful response to 45Q in the marketplace, with around 220 new carbon management projects announced to date, representing roughly 200 million metric tons of potential annual carbon capture and storage capacity.

While significant development of natural gas-related carbon capture projects is occurring in gas processing, ammonia and hydrogen production, industry leadership is needed to deploy carbon capture on more challenging natural gas combustion streams at power plants, liquefaction terminals, refineries, and industrial facilities.

For its part, DOE is supporting two commercial scale carbon capture demonstrations—one at a combined-cycle natural gas power plant and the other at a cogeneration facility, as well as a number of industrial and power sector FEED studies.

Transitioning to Clean Hydrogen and Ammonia

Turning to hydrogen and ammonia, natural gas provides the lowest-cost pathway to jumpstart development of a low-carbon hydrogen and ammonia production, but only if we capture and store the associated CO2 emissions and successfully reduce supply chain methane emissions to near zero.

DOE’s Hydrogen with Carbon Management Program has deep roots and a real track record. Perhaps the most notable success is Air Products’ first-of-a-kind commercial scale demonstration of carbon capture storage from two steam methane reformers at Valero’s Port Arthur refinery here in Texas. This DOE-funded pioneer project has successfully captured and permanently stored more than 90% of its CO2 emissions—a million tons annually for over a decade.

The Bipartisan Infrastructure Law features $8 billion for the development of regional clean hydrogen hubs, and last year DOE announced $7 billion to launch seven regional hubs to accelerate commercial scale deployment of clean hydrogen production, plus additional funding of a consortium to purchase hydrogen and provide early market demand.  All but two of these regional hubs feature production of hydrogen with carbon capture and storage, either from natural gas or biomass.

We expect these hubs will kickstart a national network of clean hydrogen producers, consumers, and connective infrastructure, ultimately producing three million metric tons of clean hydrogen annually, or 30 percent of our total annual goal in 2030.

The production of ammonia with carbon capture for the manufacture of fertilizer and for potential use as a hydrogen carrier for decarbonizing hard-to-abate industries creates additional decarbonization opportunities for the natural gas and LNG industries.

The war in Ukraine has drawn particular attention to the vulnerability of global supply chains for fertilizer production. The need for diversification of supply, combined with the viability of carbon capture in ammonia production thanks to the 45Q tax credit, has created a favorable economic environment in the U.S., and some companies have already launched commercial-scale projects.

In this context, DOE’s investment in ammonia production from natural gas has focused primarily on developing geologic storage in proximity to projects, such as the Wabash Valley Resources ammonia production site in Indiana. And additional ammonia projects are undergoing review for financing from DOE’s Loan Programs Office.

Scaling Up Permitting

Just as industry needs to scale up deployment of carbon management projects to meet climate goals, the federal government needs to do its part and ramp up the permitting of projects to achieve climate scale.

This need is reflected in rising industry demand for geologic storage permits, with nearly 150 applications for Class VI CO2 storage wells currently pending before the Environmental Protection Agency’s Underground Injection Control Program.

EPA and DOE are working together to develop tools and training opportunities to support permit applicants and reviewers across EPA and states. Congress has provided additional funding to expand EPA’s capacity, in part by bringing the expertise of DOE’s national labs to bear in support of the permitting process. 

DOE is also supporting the delegation of federal Class VI permitting authority to states—known as state primacy—as a critical tool for meeting our own statutory responsibilities in implementing the Bipartisan Infrastructure Bill and to support a wider industry buildout of carbon management projects.

There are also challenges to permitting of CO2 pipelines that require new approaches and increased coordination on the part of governments at all levels. Last October the Department of Energy and the Council on Environmental Quality launched two federal Permitting Task Forces to help address the efficient, orderly and responsible development of CO2 pipelines and related carbon capture and storage projects on both private and federal lands and that cross federal, state and tribal boundaries.

In closing, oil and gas companies have long been leaders in carbon management, pioneering large-scale carbon capture, transport and storage projects, in some cases decades ago. Many more companies are now harnessing available federal tax credits, financing and funding in the U.S. and taking advantage of new policy commitments in other regions of the world to advance broader commercialization and deployment.

Just as tackling methane emissions in the near term is essential to charting a sustainable path for natural gas, so too is accelerating the deployment of carbon management over the medium to long-term—both to decarbonize gas processing, liquefaction and end uses of natural gas and to facilitate the broader transition to clean hydrogen and ammonia.

We applaud steps that many in the natural gas industry are taking to reduce greenhouse gas emissions, and we at DOE are working to help provide the tools industry needs to reduce emissions across the natural gas supply chain.

However, more companies need to make concrete commitments, and with greater urgency, if industry is to demonstrate to the broader public that natural gas is ultimately compatible with a net-zero world and a fundamental part of the broader portfolio of climate solutions.

And we at DOE look forward to continuing to work with your industry to advance a broader and more ambitious methane mitigation and decarbonization agenda.

Thank you.