Geopolitics Demand Natural Gas And Energy Transition

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TC Energy CEO Francois Poirier talked up global natural gas supply security and energy transition – and the Calgary-based midstream company’s embrace of both – during a first-quarter earnings call April 29, reports SP Global.

Energy supply disruption

War in Ukraine and consequent energy supply disruption “have amplified the discussion around energy security and highlighted the important role our industry plays in meeting today’s energy needs,” Poirier said. “While the world confronts a serious geopolitical shift, a transition to cleaner energy that also meets the world’s demand is still required. ”

The “intersection of energy security and energy transition is not an obstacle to growth. We believe, rather, that it’s a catalyst.”

During the current earnings season, executives at Appalachia natural gas producers EQT, Antero Resources and Southwestern Energy, as well as majors Chevron and ExxonMobil have talked about opportunities presented by growing LNG exports from North America. Poirier also took up the theme. About one-quarter of US LNG export volumes travel through TC Energy’s US pipelines, according to the company.

Pipes for LNG

Current pipeline projects supporting LNG export terminals are Grand Cheniere XPress (1.1 Bcf/d, in service); Louisiana XPress (0.8 Bcf/d, in progress); East Lateral XPress (0.7 Bcf/d, FERC approved); North Baja XPress (0.5 Bcf/d, FERC approved); Alberta XPress (about 0.2 Bcf/d, FERC approved).

“North American LNG exports peaked this year at 13.7 Bcf/d, and we now expect that amount to grow by over 90% to 25 Bcf by the end of the decade,” Poirier said.

“There are plenty of growth opportunities for us in supplying the LNG facilities with their needed gas for their expansions…”

Stanley Chapman, president of US and Mexico gas pipelines, told analysts that north-to-south flows on the Columbia Gulf Transmission and ANR pipeline systems are fully compressed and contracted, but looping of the systems to bring more Appalachia gas to the Gulf Coast for liquefaction and export “is not out of the question.”

In fact, with current supply, demand and price outlooks, a greenfield pipeline from the Columbia Gulf system to the Gulf Coast could pencil out.

“It likely would have a transportation rate of about $2, but if you believe, as I do, that the war in Ukraine has caused a fundamental shift with respect to where our European allies source their gas from, and that this incremental demand for natural gas is going to keep prices in Europe and Asia in the $13 to $20 range, which is where they currently are for 2023 and 2024, the $2 transportation rate for incremental pipeline capacity to the Gulf Coast may well clear the market.”

Energy transition

As for embracing energy transition in the natural gas transmission business, TC Energy plans to move cleaner gas by building out and operating renewable natural gas transport hubs along its US system. Renewable natural gas, or RNG, is gas produced using methane captured from landfills, wastewater treatment facilities, animal manure, and other sources of decomposing organic matter, that is then processed to meet conventional gas pipeline requirements.

TC Energy also is pressing forward on renewable and low-carbon energy projects, seeking to extend the life of its Bruce Power facility, which is Canada’s only private-sector nuclear generator and provides 30% of Ontario’s power.

“New fuels will also be needed to power the energy grid of the future…For example, we’re actively pursuing opportunities in the hydrogen economy, developing hydrogen hubs to serve long-haul transportation and other industrial uses,” Poirier said. “Just this week, we announced that we’ve identified our existing Crossfield storage site as a potential hydrogen hub location.”

Gas throughput up

Average flows on US gas pipelines were up 5% compared with the year-ago quarter, reaching an average of 30 Bcf/d. An all-time peak of 35 Bcf/d was set one day in January. Columbia Gas, Portland Natural Gas Transmission and Gas Transmission Northwest all set all-time sendout records in either January of February.

Consolidated net income was C$358 million ($279 million), and on a per share basis 36 Canadian cents, in the first quarter compared with a net loss of C$1.06 billion (minus C$1.11/share) in the year-ago quarter.

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Source: SP Global

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