Our focus at ExxonMobil is providing affordable and reliable energy while reducing greenhouse gas emissions. In the past few months, there have been dramatic changes in the market for LNG (liquefied natural gas) both in price and regional demand. For those of you who don’t know, LNG is natural gas that has been cooled to a liquid state which enables us to safely transport it to customers around the world.
I shared ExxonMobil’s progress on plans to nearly double our LNG production by 2030 at the World Gas Conference in Daegu, South Korea earlier this year. As I shared in Daegu, natural gas and LNG will continue to play a key role in reducing emissions by taking the place of higher-emissions sources like coal throughout the energy transition.
The power of natural gas
Natural gas is a versatile, abundant, lower-emission fuel which requires extensive infrastructure to super cool it to create LNG, transport it from production site to markets around the world, and then return it to its natural gaseous state to transport via pipeline to consumers.
Continued investment in new and expanded infrastructure is required to support availability of stable, secure supplies around the world to help economies grow and reduce emissions. We are seeing this play out in the global markets today with the current tight supplies and high prices due to low investment during the pandemic.
Recent geopolitical events have exacerbated the impact – highlighting the importance of LNG in ensuring the security of energy supply. Today, demand is outpacing available supply but ExxonMobil is working to meet society’s needs.
From the U.S. to Africa, Asia and the European Union (EU) – demand for reliable energy with lower emissions is soaring. And that’s where natural gas can continue to play a big role because power generated from LNG instead of coal has only half the greenhouse gas emissions.
According to the European Commission, in the EU, natural gas represents 23.7% of the overall energy consumption, compared to 10.2% for coal. The EU’s move towards alternative fuel sources, such as LNG and renewables, has played a part in the 27 member states’ ability to make progress in reducing greenhouse gas emissions over the past few decades. The European Environment Agency states that by 2020, emissions across the EU were down 31% on 1990 levels.
Unfortunately, developing countries and emerging economies continue to use coal for power generation. In fact, nearly 40% of the world’s electricity is still generated using coal, according to the World Coal Association.
Clearly there is opportunity around the world to achieve meaningful emission reductions by switching to natural gas. This is the thinking behind our plans to grow our LNG business. We are also evaluating other opportunities to use LNG to reduce emissions, including combining LNG with carbon capture and storage to deliver low-carbon solutions such as hydrogen to help address hard-to-decarbonize sectors like industry and transportation.
ExxonMobil’s Advancing Climate Solutions 2022 Progress Report outlines our net-zero ambition for operated assets by 2050 and plans to invest more than $15 billion over the next six years on initiatives to lower greenhouse gas emissions. Part of our plans include lower-emissions natural gas and LNG.
A path forward with partners
We have made great progress and secured strong partnerships in the U.S. and around the world that will be critical to making our growth plans a reality.
Efforts include a floating LNG plant that recently started producing in Mozambique, construction of an LNG terminal in Texas that will start producing in 2024, and expansion of LNG production in Papua New Guinea and Qatar. The U.S. terminal, at Sabine Pass on the Gulf of Mexico, will export 16 million metric tons of LNG a year, which is enough to generate enough electricity for nearly 10 million households.
Increasing the global natural gas supply is a priority of government leaders around the world as stress on global demand continues. Governments are taking action by approving necessary LNG project permits and looking to remove regulatory obstacles. These efforts will enable additional natural gas supplies to be produced for society’s needs and help the world lower its emissions.
Through these LNG opportunities, government support and strong interest in financing LNG projects across the world, we are optimistic and confident that LNG will continue to be an important part of our business as we support a lower-emission future.