Natural gas is here to stay, say oil giants

A green transition cannot occur without natural gas.

The first Barnett Shale gas well, C.W. Slay#1 near Fort Worth, TX, drilled and fracked in 1981, started the shale revolution

What a breath of fresh air to see Bloomberg Green state the obvious in an article on June 23, 2023, titled “Oil Giants from Shell to Chevron Say Gas Here to Stay for Green Transition.” It was no doubt difficult for the Bloomberg writer to type:

The biggest fossil fuel players are making the message clear: the transition to a green future will require much more natural gas.

From Shell Plc to Chevron Corp., the world’s top producers plan to accelerate investments in the fuel. China keeps signing deals to buy liquefied natural gas past 2050, with European importers not far behind. The US is forging ahead with new projects that will make it the world’s top LNG exporter for the foreseeable future.

It took Shell, Chevron, ExxonMobil, B.P., and others a few years to get up the nerve to complete comprehensive plans and publicly state that the world depends on oil and natural gas, and it will not be replaced anytime soon. These companies knew that the world needed fossil fuels for decades because renewables cannot replace them, but they could not risk lowering their ESG scores by speaking the truth. Finally, they could no longer keep silent and are speaking out with their fossil-fuel-oriented business plans.

In early June of this year, 2023, Shell’s executive vice president for LNG, Cederuc Cremers, said in an interview:

We have always known that gas is crucial for the energy transition, but our new strategy is built around a new belief — that gas will continue to play a key role in the energy mix. 

Cremers noted that Shell’s LNG operations had helped boost Shell’s earnings significantly, depicted in the graph below.

Shell’s annual meeting in May this year was disrupted by protestors calling for the company to invest more in renewables. Shell remained steadfast in their strategy to emphasize their commitment to invest in natural gas with a focus on LNG and additional emphasis on carbon capture and storage as well as hydrogen.

Shell’s CEO Wael Sawan told investors last month:

Liquefied natural gas will play an even bigger role in the energy system of the future than it plays today.

LNG can be easily transported to places where it is needed most. And what’s more, on average, natural gas emits about 50% less carbon emissions than coal when used to produce electricity.

This change in direction by major oil companies to not back away from oil and natural gas marks a significant turning point for these companies and for LNG and natural gas generally. Russia’s invasion of Ukraine, and the subsequent price surges for LNG, changed the long-term prospects for natural gas when Germany and other countries rushed to sign long-term contracts to avoid energy shortages.

According to the International Energy Agency, about 60 billion cubic meters of new gas production capacity has been approved since Russia invaded Ukraine, nearly double the rate in the past decade. Even IEA, the International Energy Agency, had to admit that the loss of Russian natural gas had caused a surge in LNG infrastructure which altered the market penetration of renewables for decades, as shown in these graphs in the IEA’s latest report.

The fact is that some environmental NGOs acknowledged decades ago that natural gas was needed for a transition away from fossil fuels. On March 13 of this year, I wrote in an article titled “The war on natural gas ramps up”:

When the “shale revolution” was getting underway in the early 2000s, the anti-fossil fuel activists focused on air emissions during drilling and the possibility of water pollution from the hydraulic fracturing process. I was Director of the Barnett Shale Energy Education Council starting in 2007 and dealt with these groups frequently. Some actually supported the idea that natural gas was a transition fuel that could displace coal-fired power generation.

These groups supported that position because natural gas was thought to be limited in supply, harkening back to the “peak oil” theory developed by M. King Hubert in the last 1950s. The anti-fossil groups turned against natural gas when the shale revolution revealed that the United States had hundreds of years of natural gas reserves.  They then started attacking natural gas as a dangerous air pollutant.

The war against fossil fuels, in general, and natural gas, in particular, has ramped up significantly with calls to eliminate natural gas-fired power generation starting in 2024 (here and here).

The bottom line: After years of complete nonsense about the necessity for a transition from fossil fuels to renewables immediately and little pushback from the oil and gas industry, some sanity has arisen and is being implemented by major oil companies and their customers. Of course, the pushback from the anti-fossil fuel NGOs, the WEF, and United Nations will become increasingly intense, but this battle must be fought and won with sane and realistic energy plans. Otherwise, the world is headed for a rude awakening.