Oil and Gas Executives Talk Fracking, LNG Freeze and ‘Realistic Science’

HOUSTON — Executives from Chevron and other fossil fuel companies said Tuesday that natural gas is the primary solution to cutting carbon dioxide emissions in the energy sector as the transition to new technologies takes longer than expected.

Chevron CEO Mike Wirth, speaking on the first day of this week’s Gastech conference, called for a “balanced conversation” about changes in the energy sector and the role of natural gas based on “realistic science.” He said the fuel could offer reliability as well as lower carbon emissions, citing its role in power generation as coal-fired power plants are being displaced.

“Reducing these emissions by switching from coal to natural gas could represent the single largest carbon reduction initiative in history,” Wirth said in prepared remarks. “These reductions are achievable and do not disrupt national economies or individual lives.”

The case for gas is so strong, he said, “that only politics can stand in the way.” Wirth’s arrival in Houston comes less than two months after the oil and gas company announced it was moving its headquarters from California to Texas.

The CEO’s comments also came as organizers estimated that about 50,000 people from around the world had gathered for Gastech in Houston — Texas’ largest city and the traditional energy capital of the U.S. Still, Tuesday began with a fire near the city after a vehicle struck a ground valve, causing a pipeline carrying natural gas liquids to explode — and a reminder of the volatility of fossil fuels.

Executives from companies including ConocoPhillips and Cheniere — both based in Texas — have criticized the Biden administration for slowing the issuance of permits to export liquefied natural gas while offering support for fracking, a drilling process that has drawn increased attention during this year’s presidential campaign.

For years, natural gas companies have touted natural gas as a “bridge fuel” for countries looking to shift to reducing CO2 emissions with renewable energy sources like solar and wind. Generating electricity from natural gas generated less than half the carbon dioxide emissions of coal-fired power per megawatt in the U.S. in 2019, according to the U.S. Energy Information Administration.

Jack Fusco, CEO of LNG company Cheniere, said the energy transition will take longer than expected because technology is evolving. He said environmental groups that want to switch directly from fossil fuel generation to renewables do not understand how electricity systems work.

“I think there’s a misconception that you can replace base-load coal-fired power plants with renewables,” Fusco said. “You can’t. You can’t run an oven, a hair dryer or a dishwasher on renewable energy.”

He said that’s because renewables can be unstable and deliver power spikes and dips, making them difficult to integrate into electric grids without the more stable flows of electrons that can come from natural gas-fired power plants. But renewable advocates say utility-scale batteries could help fill the gap, and installing more renewable and transmission capacity could help ease potential shortages.

The DOE’s research agency said in its latest short-term energy outlook that natural gas’s share of U.S. electricity generation will decline slightly between 2024 and 2025 — from 42 percent this year to an estimated 39 percent in 2025. But natural gas was still the nation’s largest source of power last year.

However, environmental and human rights groups have expressed concerns that continued reliance on natural gas and other fossil fuels will accelerate climate change, allowing emissions to remain high.

Tyson Slocum, energy program director at consumer group Public Citizen, said the “real world” is one in which the climate crisis affects people everywhere.

“Being realistic doesn’t mean making science political because it’s inconvenient for one industry,” Slocum said in a statement Tuesday. “Fossil fuel companies can rebrand the problem as much as they want, but the future we want to live in is one where clean, reliable energy drives us forward into a brighter future for all.”

LNG supply interruption

The Biden administration’s freeze on LNG export approvals, which is now pending, was also a major topic of discussion at Gastech on Tuesday.

The White House announced an Energy Department freeze on LNG export applications to countries that do not have a free trade agreement with the United States in January, but it was overturned in July by a judge appointed by former President Donald Trump. The Biden administration appealed that order from Judge James Cain of the U.S. District Court for the Western District of Louisiana last month.

The freeze did not affect previously approved exports. The United States exported more LNG than any other country in 2023, the EIA said.

While the DOE issued a non-FTA agreement in late August for an LNG project in Mexico, observers said they do not expect the department to issue any additional approvals before the next president — either Trump or Vice President Kamala Harris — is inaugurated in January.

Chevron’s Wirth said the Biden administration’s approach puts politics before progress. He said LNG could lower emissions by accelerating the transition away from coal and providing energy stability for U.S. allies in Europe and Asia.

“So, in terms of advancing economic prosperity, energy security and environmental protection, the LNG permitting pause fails on all three counts,” Wirth said. “It raises energy costs by removing potential supplies from the market. It threatens reliable LNG supplies by undermining the energy security of our allies.”

DOE said the analyses that underpin its public interest determinations for LNG approvals for non-FTA countries are several years old and need to be updated given how much LNG the department has already allowed to be shipped overseas. The department also issued a fact sheet in February to combat what it called misconceptions about the policy and later issued a letter rejecting the industry’s arguments.

But some of the largest LNG suppliers and buyers seemed less concerned during a panel shortly after Wirth’s remarks. Meg O’Neill, chief executive of Australian oil and gas company Woodside Energy, said her company was not affected by the Biden administration’s shutdown.

She said companies like hers see presidential administrations — and their policies — come and go, but the fallout from political decisions like a pause can cause some concern. O’Neill said the “wobbly” support for the industry from countries like Australia and the U.S. could be a concern among buyers.

“This is causing concern among our buyers and the buying community who are scratching their heads and saying, ‘Well, we built our economies on your product,’” she said. “Now they are at risk of disrupting the energy supply that is the backbone of their economies.”

Local elected officials in Louisiana on Monday encouraged LNG companies to continue construction after a work stoppage was imposed, despite the Biden administration’s promise to continue fighting the halt in court.

While the Federal Energy Regulatory Commission is responsible for approving the location and construction of LNG import and export facilities, the DOE is responsible for authorizing LNG exports.

“I hope FERC will continue to work and approve these permits,” said Louisiana state Sen. Jeremy Stine, a Republican. “But as far as these companies in southwest Louisiana or anywhere else, you can continue to work because Judge Cain gave you the right to do so. And I hope the Department of Energy will continue to approve them.”

Effects of elections

Although the LNG shutdown remains in legal limbo, Brad Crabtree, deputy assistant secretary of the Energy Department’s Office of Fossil Energy and Carbon Emissions Management, expressed optimism Tuesday that the inflation-reduction bill of 2022 will be safe even if Trump, the Republican presidential candidate, wins the November election.

He pointed to historical precedents for tax breaks and Congress’s reluctance to change the rules for the private sector after the update was passed. He said DOE is focused on allocating $12 billion earmarked for carbon management projects and $62 billion for energy and climate projects under the bipartisan infrastructure bill of 2021 over the five-year period set out in the law.

“We are literally moving heaven and earth to make sure that the various funding streams are used in this presidential term and that we allocate as much money as possible to them,” Crabtree said.

Meanwhile, company executives have focused on reversing the policies of Harris, the Democratic presidential candidate, who has said she does not support a ban on fracking. During her 2019 presidential campaign, Harris said she would support a ban on hydraulic fracturing.

Cheniere’s Fusco said Harris had no choice but to embrace fracking. If she didn’t, he said, natural gas and oil prices would rise dramatically.

Asked by the moderator if he trusts her pivot, Fusco said, “We’re hoping that reason will prevail and that maybe she’s being honest in what she’s saying. So yeah, I have to trust her — until I don’t.”

ConocoPhillips Oil and Gas CEO Ryan Lance said the industry needs to do more than just ask candidates for their position on fracking.

“That’s another question that’s really important,” Lance said, adding that support for fracking means a person supports the infrastructure needed to get gas to markets.

“So you’re going to support federal lease sales (for oil and gas) to continue this revolution, but you’re going to stop this crazy LNG shutdown,” he said.

Webb reported from Houston. Reporter Carlos Anchondo contributed from Washington.