A press release from the U.S. Department of Energy would not typically receive a lot of attention. But DOE issued a statement on May 28 in support of an LNG export project on the Gulf Coast, referring to gas exports as “freedom gas,” setting off howls and ridicule on the internet.
Top U.S. officials have often framed gas exports as a way of advancing “freedom,” particularly in Europe. But while many laughed at the phrase, the press release contained other language that was mostly overlooked. DOE repeatedly referred to LNG as “clean energy,” and advocated for more gas exports in order to spread clean energy around the world.
In fact, the announcement in support of an LNG export project came at the 10th Clean Energy Ministerial. The entire premise of the forum is to advance low-carbon solutions globally, and it was an outgrowth of the 2009 international climate change negotiations in Copenhagen.
But is LNG really clean? Exporting LNG is largely politically uncontroversial at the federal level, with both parties supporting it in Washington. In fact, the Obama administration helped inaugurate LNG exports, giving the greenlight to a series of export projects. The first LNG exports came from Cheniere Energy’s Sabine Pass facility along the Gulf Coast in 2016. Gas exports were framed as a net benefit for the climate because gas would knock off coal plants around the world, just as gas has done in the United States. The LNG industry lobby group makes that case explicitly.
Gas is often cited as having half of the carbon emissions as coal, and as such, it is a “bridge fuel” to a cleaner future. However, that is greatly contested because of the leaks of methane that occur along the entire natural gas supply chain – at the wellhead, at compressor stations, along pipelines, etc.
Methane is much more powerful than CO2, so the extent to which methane escapes, it negates the benefit of gas. There is a lot of controversy around this topic, but the general consensus is that if the industry is leaking more than 3 percent of its gas, the benefit of gas over coal vanishes.
Meanwhile, there are additional problems with LNG exports that have mostly flown under the radar. A new investigative report from E&E News and the Center for Public Integrity found that storage tanks at Cheniere Energy’s Sabine Pass facility leaked LNG.
“Last year gashes up to six feet long opened up in a massive steel storage tank at Sabine Pass, releasing super-chilled LNG that quickly vaporized into a cloud of flammable gas,” reporters Jenny Mandel and Jie Jenny Zou wrote. “Federal regulators worried the tank might give way, spilling the remainder of the fuel and setting off an uncontrollable fire.”
The leaks apparently were not isolated, and multiple storage tanks had problems over the past decade. The nightmare scenario would be a series of “cascading explosions,” a safety expert said.
The issue is not merely an interesting story about the dangers at one particular industrial facility. “The leaks are a red flag at a time of unprecedented expansion in the LNG industry, which promotes the fuel as not only safe but also a clean, more climate-friendly alternative to coal,” the report said. More and more research is calling into question the benefit of gas over coal, and that “does not yet account for LNG exports, which likely worsen the total climate impact for gas,” Jenny Mandel and Jie Jenny Zou wrote.
In addition, the wave of new LNG export terminals are billion-dollar assets and their developers fully expect them to operate for decades. In fact, the oil majors are heavily pivoting towards LNG exports because they view gas as more resilient in the long run in a carbon-constrained world. The corporate strategy for many of the largest oil companies is to dial back on risky oil exploration and invest heavily in gas exports, along with downstream refining and petrochemicals.
As governments tighten the screws on carbon, some projects could face trouble. If LNG is found to be not nearly as beneficial to the climate as the industry claims, that raises questions about financial risks. One need not be concerned with climate change to recognize the danger that some of these investments carry. As Bloomberg notes, the top 10 energy companies are planning $1 trillion in investment through 2030. Or, put another way, about a third of the $5 trillion expected to be spent on fossil fuels between 2018 and 2025 are at risk of becoming stranded assets, according to Carbon Tracker.
“The energy system has to be changed far, far faster than ever before,” Nick Stansbury, head of commodities research at pension manager Legal & General Group Plc in London, told Bloomberg. “We don’t think that risk is necessarily well-priced by the market.”
By Nick Cunningham of Oilprice.com
More Top Reads From Oilprice.com: