• Natural Gas News

    EQT CEO strikes out against call to limit gas exports

Summary

"Cancelation movement" has resulted in record high New England natural gas prices.

by: Dale Lunan

Posted in:

Natural Gas & LNG News, Americas, Liquefied Natural Gas (LNG), Top Stories, Americas, Premium, Editorial, Corporate, Corporate governance, Political, Ministries, Environment, Regulation, Infrastructure, Pipelines, News By Country, United States

EQT CEO strikes out against call to limit gas exports

EQT CEO Toby Rice, in a February 16 letter to US energy secretary Jennifer Granholm, said calls earlier this month from several US senators to limit natural gas exports had nothing to do with gas exports or high prices, and everything to do with a “cancelation movement” that has stalled gas pipeline projects in the US Northeast.

On February 2, 10 senators, including seven from states in New England, wrote to Granholm urging her to “take swift action to limit US natural gas exports and examine their impact on domestic energy prices.”

The fact that seven of the 10 signatories to the letter were from New England, Rice wrote, was “difficult to look past”, as was its timing – the weekend before the letter was sent, natural gas prices in New England reached levels that were among the highest in the world, approaching $30/’000 ft3. At the same time, he pointed out, natural gas next door in Pennsylvania, home to the massive Appalachia shale gas deposits, was selling for about $5/’000 ft3, below the 20-year average.

“There is no need to ‘halt permit approvals of US LNG export facilities’ pending the conduct of ‘a review of LNG exports and their impact’ on prices experienced by New Englanders,” Rice wrote. “There is no active LNG export facility in New England, meaning there is no incremental demand from US LNG in New England that would explain why it has prices over five times those of neighboring states.”

Supply issues are not the problem, he wrote. The problem “is very straight forward: the pipelines heading to New England are full, and as a result, we cannot physically flow that gas needed to meet growing demand without more infrastructure.”

Rice set out six natural gas transmission pipeline projects that have run into stiff environmental and landowner opposition – what he called a “symbolic” attempt by a New England-based “cancelation movement” to address climate change by canceling pipelines, thereby isolating the region from domestic supply.

The six pipelines, which have either been canceled outright or are stalled, would cumulatively have the capacity to move about 7bn ft3/day of natural gas to markets in New England, where the gas would serve more than 25mn homes – at prices much less than what was experienced in the region in late January.

The cancelation movement, he wrote, was based on an assumption that the natural gas pipelines were not needed, and that lower emission alternatives were the best option for meeting future energy needs and addressing US climate change ambitions.

But since the first of those six pipelines was canceled, consumption of natural gas in New England has increased, not decreased, and because the area does not have sufficient capacity to access domestic US gas, it has become reliant on gas imported from elsewhere.

“New England is the only region remaining in the United States that is importing LNG from foreign sources,” Rice wrote. “Rather than relying on natural gas sourced from Appalachia with some of the lowest methane emissions and smallest carbon footprints on the planet, New England instead has to source foreign supply shipped from over 2,000 miles away. Not only has the cancelation movement resulted in New England’s natural gas being the least responsibly‚Äźsourced with the highest emissions in the United States, it has also caused the region to be subject to international LNG pricing. This is the reason New Englanders are paying five times more for natural gas than their neighbors.”

The infrastructure cancelation movement, Rice continued, recklessly inserts costly inefficiencies into New England energy markets, and at the same time exports accountability for emissions. Emissions in New England haven’t fallen, he wrote, but have actually increased, as have energy costs.

“Had New England allowed the construction of pipelines into its region, it would be consuming the same amount of natural gas that it is today, but without the exorbitant costs being borne by its citizens,” Rice wrote. “Those savings could have gone towards investments in other decarbonisation opportunities, such as renewables. Instead, New England is maxing out the consumption of other emissions‚Äźintensive power sources and importing foreign natural gas, both of which are worse for the environment.”

Limiting US exports of LNG will do nothing to mitigate either soaring natural gas prices in New England or greenhouse gas emissions, in New England, the rest of the US, or anywhere else in the world.

“If natural gas producers cannot deliver incremental volumes to New England from only 200 miles away due to a lack of pipeline infrastructure, neither can LNG cargoes docked in ports off the coast of Louisiana,” he wrote. “Just as a lack of sound policy grounded in reality has resulted in Trinidad and Tobago supplying natural gas to New England instead of Appalachia, so too will Russia, Iran and Qatar supply the rest of the world if we continue to limit US LNG. And the results will be the same: increased emissions and increased cost to Americans, with an added consequence of enhanced geopolitical risk.”