U.S. Oil & Natural Gas Industry Has Caused a “Tectonic Change” in Energy Markets
Following a “tectonic change” in global energy markets over the past decade from the shale revolution, “there is a bright future for natural gas,” according to American Gas Association President and CEO Karen Harbert.
In a recent Columbia Energy Exchange podcast on the U.S. oil and natural gas industry and the infrastructure and regulatory challenges it’s facing, Harbert discussed with host Bill Loveless how much America’s energy renaissance has changed the world energy outlook and reduced emissions.
The United States has transformed from energy scarcity to energy security in less than a decade.
Harbert, who worked in the Bush administration’s Department of Energy, described how supply concerns hampered its response to hurricanes Katrina and Rita. While the government could tap the Strategic Petroleum Reserve to help bring down gasoline prices, there was no such additional supply of natural gas.
“As I was looking at natural gas in 2005, I had no options. I had no extra supply. There was no extra supply on the market.”
At the time, the government rushed to expedite the permitting of import infrastructure to meet demand. Today, Harbert says, some of that import infrastructure is being converted to export infrastructure, which she deemed a “tectonic change” in the industry.
Her remarks come on the heels of an International Energy Agency report that found that the United States will be the world’s largest net exporter of natural gas within five years. This dramatic announcement frames just how far the country has come since 2005.
More infrastructure is needed to meet growing demand.
But the United States isn’t just meeting world energy demands. Many Americans are switching to natural gas and even more are getting their electricity from natural gas-fired power plants, thanks to the abundance of the resource unlocked by shale development. New infrastructure is essential to keep up with this rising demand.
“The natural gas utilities that [AGA represents] add a customer every minute. Every minute of every day. So, this year alone, you know, we’ve added about 250,000 new customers and we’ve put in about 6,000 miles of new pipeline.”
She stressed the safety benefits of pipeline construction, explaining that the industry has spent $10.5 billion to improve safety and that in many instances, new construction can replace aging systems installed 50 to 60 years ago. However, permitting concerns continue to delay the construction of energy infrastructure. This could hamstring growth, especially if delays cause projects to lose investor backing.
“We actually need to be able to move these gas molecules around the country and that’s becoming an increasing challenge to get these large pipeline projects permitted. It’s taking a long time. It’s costing a lot of money and capital doesn’t wait so long.”
Increasingly, environmental activists are attempting to “Keep It In the Ground” by targeting pipelines, including the replacement of older infrastructure Harbert discussed. KIITG-like policies have also caused some states to miss out on the benefits of the shale revolution. For instance, in New England and New York, stiff resistance to pipeline projects has prevented natural gas produced in the nearby Marcellus and Utica shale regions from reaching these markets. As Harbert explained:
“Right now, there are a number of pipeline projects that have been proposed to take gas from not too far away, Pennsylvania, Ohio, bring it through New York, supply a little bit to New York or Westchester County but go up to New England where they are dying for more natural gas. … So, if we could get those projects permitted, and up to New England, they would have an affordable, reliable supply of natural gas and when it’s practical, they can also back up the renewable sources up in New England. So it’s a win-win for New England but it is really difficult to get to the state of New York right now.”
Beyond these blockades of infrastructure in the Northeast, KIITG activists have also strategically used vandalism and trespassing to delay projects – actions that risk danger to both people and the environment, while costing pipeline companies millions of dollars in construction delays. Prompted by these actions, several states and the federal government have proposed legislation to stiffen criminal penalties for those who vandalize pipeline infrastructure as the industry continues to improve the safety of pipelines.
Further, as Harbert explained, the oil and natural gas industry is working with the Pipeline and Hazardous Materials Safety Administration to draft legislation that would reauthorize safety programs, expand grants funding community pipeline safety training and emergency response and extend research and development awards and state pipeline safety program grants. As Harbert said:
“So, it’s stepping up to the plate when you need to. As we look to the rest of this Congress, we have to do a pipeline reauthorization bill and that’s all about safety.”
Natural gas is a win for the economy and the environment.
Harbert also believes the industry can contribute to discussions about reducing greenhouse gas emissions and increasing energy efficiency.
“[N]atural gas is a part of the solution to addressing our environmental challenges, concerns, aspirations as I mentioned earlier, because we are using more natural gas, our CO2 emissions are coming down, importantly also the really bad pollutants like mercury and toxics and those things have come way, way down which has improved people’s air and people’s water. And that’s a really important thing for us in this country.”
Telling Loveless that the environmental footprint of natural gas was a “great story,” she lauded how the gas industry has reduced emissions while growing its customer base.
“We are using more natural gas today and our emissions from the sector are coming down. That’s because we are replacing some coal, but [natural gas] is also becoming a lot more efficient and we have high technology devices that we are putting into homes and businesses that are allowing them to use natural gas more efficiently.”
The increased use of natural gas for electricity generation has not only reduced carbon emissions, it has also lowered levels of contaminants like mercury. Nonetheless, natural gas has been demonized by activists pushing a zero-fossil fuel agenda, that is far-removed from reality. As Harbert explains:
“Because remember, this isn’t something that can be solved by one technology or one industry or frankly even one country. The solutions have to be practical, they have to be scalable and they have to be technologically ready and all of that comes back to in some way natural gas that has all that attributes.”
U.S. natural gas has a vital role to play in not only ensuring global access to an abundant supply of energy, but doing so in a way that improves the environment. As Harbert explains:
“It’s an important part of our energy future as a clean source of energy. It’s an important part of our competitiveness, by keeping natural gas prices low, electricity prices low. It’s an important part of our trade relationship with countries around the world as we are supplying, you know, more energy to market and having them have access to alternatives, to you know, Russian gas or other gas. So, it’s like look across the United States and around the world. There is a bright future for natural gas for sure.”