David Carroll, president of the International Gas Union (IGU) – the association which aims to promote the technical, economic and political interests of the global natural gas industry – discusses the successes of the three-year US presidency of the IGU and the vital role of natual gas within the global energy mix of the future.
Please start by introducing yourself as well as the mandate and role of the IGU.
I have had the privilege of leading and serving the IGU for the last three years of the USA’s presidency. I would like to think that the USA presidency has made an impact on both the global gas industry and IGU as an organization.
My day job is as president and CEO of the Gas Technology Institute (GTI), a technology research and training organization based in Chicago. The USA presidency of IGU is hosted by the American Gas Association (AGA) in Washington DC. AGA is an organization that represents the interests of hundreds of local gas distribution companies in the US.
“We believe that natural gas is not just a transition fuel, but a critical element of today’s and tomorrow’s future energy mix”
The IGU has been around for over 86 years and exists to promote the interests of the natural gas industry globally, be they technical, economic or political. It is an organization that spans 91 countries that collectively represent 97 percent of the world’s production, transportation and use of gas. We span the entire value chain and focus on creating both opportunities for increased demand, for a more economical supply of gas, and ensuring that gas has a critical role in the world’s future energy mix.
What have been your priorities over the last three years?
The US presidency has taken a results-oriented approach. We set out to accomplish four major objectives. The first was to grow the market share of gas in the global energy mix. The second was to reach out to policy makers worldwide and influence them to accept gas as an ally in achieving their local, regional or global development and growth. The third was to more firmly establish IGU as a credible ‘Voice of Gas’, by being a strong advocate for political, technical and economic progress. The fourth and final objective was to focus on member value; giving our IGU membership the tools that they need to be successful in pursuing their interests as well as supporting and facilitating a knowledge transfer across the industry in areas like innovation, best operating practices and network development between countries that are very experienced in gas with others that are relatively new to the industry.
What are the capabilities of the IGU?
We have a small but strong organization through the USA presidency and the home office, where IGU’s Secretary General Mr. Luis Bertran sits, in Barcelona, Spain. In addition to the small core of administration, the IGU benefits from a 1,000-strong group of mid- to high-level executive volunteers from our member associations and companies from around the world. Collectively, through their work on our committees, we advance the interests of the organization.
What work have you been undertaking to give a greater voice to the IGU?
For the first time, we appointed an executive director of public affairs – Mr. Mel Ydreos – a former executive at Enbridge and a seasoned professional in the gas industry and in communications.
We also launched a platform built around natural gas as a contributor to quality of life and, in particular, urban air quality. We began that effort in 2015 with documentation on real world case studies in the global media, including a full page in the Financial Times on the role that natural gas is playing in improving air quality in megacities such as Beijing and Istanbul.
Over the course of the USA presidency, we have given hundreds of presentations around the world; we held natural gas days at the G20 meetings in 2016 and we are hosting a natural gas day at the upcoming Argentina presidency of the G20, which will take place in June 2018. We have engaged at a number of high-level events including the Economist’s Energy Summit and so forth. We are really focused on this effort to promote natural gas as a key element both in creating both economic opportunity and improving the environment.
What do you see as the role of natural gas within the global move towards greener, renewable energies? What synergies does gas share with renewables?
We believe that natural gas is not just a transition fuel, but a critical element of today’s and tomorrow’s future energy mix. There have been a number of studies looking at possible penetration rates of renewables, but it appears that there is a practical limitation at the moment on how far they can go, and they need a complement; not just for when the sun doesn’t shine or the wind doesn’t blow, but because gas has multiple roles as an energy source. It generates power, but it is also a feedstock for chemicals and a direct feeding source for homes and businesses. It is also cleaner than coal, diesel and oil. Therefore, gas is an ideal component to complement the increasing growth of renewables.
“There have been a number of studies looking at possible penetration rates of renewables, but it appears that there is a practical limitation at the moment on how far they can go, and they need a complement”
Natural gas is also flexible and increasingly affordable as more and more supplies are found around the world. Its role as a global energy commodity is increasing; not just through pipeline gas but through more countries developing their own gas resources and the development of liquefied natural gas (LNG) as an increasing mode of affecting global commerce in gas.
What do you see as the emerging trends for global gas markets? How resilient has gas been at a time of low oil prices having a damaging effect on that industry?
Gas has been resilient and natural gas production and demand has grown over the past few years. The US, with its shale gas resource, has been operating at record levels, Europe has rebounded in increased demand as economies have improved, and we are seeing some coal being replaced by gas in places like Germany.
IGU under the US presidency has also focused on the developing world and non-OECD countries. We have held several events in China and India. With economies growing, populations moving to cities and energy demands rising, natural gas is going to be a major growth story with very bullish plans to integrate gas into their economies.
For India and China to be integrating gas at this stage in their development is good news in terms of environmental impact. What trends do you see emerging and how would you characterize the potential there?
In both cases, we are seeing strong leadership from government and bullish plans for dramatic increases of gas in their national energy mixes. For instance, India, where the share of gas is about six percent. Globally, this stands at around 25 percent. Prime Minister Modi and Energy Minister Pradhan have implemented an ambitious and aggressive plan to increase that share from six percent to 15 in the next 12 years, which will require more domestic production and pipeline infrastructure across the nation. India is also looking to ways to increase the amount of natural gas imports to fuel their growing economy. India has become the fourth largest importer of LNG globally.
China is similar in that it also holds bullish plans to increase the share of natural gas in the energy mix, including increasing domestic shale gas production, which has been underway for around six years. Also, with increased natural gas imports, from both pipelines and LNG. Recently, China passed South Korea as the world’s second largest importer of LNG and now trails only Japan. They have seen 30-40 percent increases year-on-year of LNG imports. The drivers of this are economic development but also cleaner electricity generation with natural gas instead of dirty coal. Coal remains an important part of both China and India’s energy mix, but as those economies grow and populations urbanize, they need to continue to find ways to fuel economic growth in a way that enhances air quality and quality of life for their citizens.
So much of the gas and renewables debate centers on power generation, and that’s important. However, a developing economy has other needs as well; chemicals and fertilizer production to enhance its food chain, heating for steel mills and other industries, and residential and commercial uses. You can see the way in which natural gas’s flexibility permeates these economies in a variety of ways – it is really the only fuel that does that.
What trends are we seeing in terms of the technologies affecting the global gas market?
As LNG grows as a global commodity, we have to address its cost, both in terms of its unit price given the feedstock, as well as the cost that goes into the value chain of liquefaction, transportation and regasification. One of the big innovations there that has opened up smaller markets has been floating technologies (FLNG), which offers the potential to reduce costs and increase the speed to market for new countries looking to get LNG online in a short period of time, such as Colombia, Pakistan and Egypt amongst others.
Another trend we have witness in recent times has been the surge of shale gas. The big story has been North America, in particular the US, though we have also seen great interest from places like China, Australia, the UK, and Argentina. And this shale gas innovation is still an emerging technology, though we have witnessed over the last decade that shale well productivity in terms of output per dollar of well cost, has improved dramatically, by 400-600% in some cases. This is through better understanding of geology, targeted exploration, fracture dynamics and other factors. One of the messages I would like to send to new shale players, is that the status of your operations will improve rapidly as you better understand your resource and processing conditions, and the US is a shining example of this.
The US shale industry has been quite resilient during the last few challenging years. Do you agree with this?
I do. And nothing drives innovation more than the need to reduce costs and improve productivity. The US shale industry has responded effectively and aggressively by adjusting operating practices and implementing productivity, as well as having more targeted drilling. Overall it has been a great opportunity for the US to increase natural gas production for domestic and international use, such as in Mexico, as well as export LNG around the world.
What is the reason behind these technological advancements?
There has been an entrepreneurial drive and mindset for innovation by smaller companies, and the majors now have picked this up. Furthermore, there is a well-established regulatory environment as well as an extensive North American pipeline network that has been able to adapt infrastructure to allow for new gas resources to enter the market quickly. Additionally, there is an established service company network that facilitates the exploitation of shale gas, and a workforce with experience in the economic benefits of the resources in places like Texas, North Dakota and Pennsylvania.
Another area the IGU has very much supported and led the natural gas industry is the drive to decreased methane gas emissions across the entire value chain. In November last year, there was a large industry initiative, attended by the majors such as Shell, ExxonMobil and Total, as well as other stakeholders, such as IGU and the World Bank, to develop a guiding principle document for methane mitigation. The industry is firmly committed to decreasing its environmental footprint
Many people are looking towards Africa. What is the potential of the gas industry there?
It is going to be an important part of the gas industry in the future. We have done a lot of work to bring policymakers and companies together to show the importance of the gas markets and how it can play a role in development. We are able to provide real world case studies and show what can be done when utilizing a strong gas network.
“We have done a lot of work to bring policymakers and companies together to show the importance of the gas markets and how it can play a role in development”
I firmly believe that Africa offers a great opportunity, though to be considered a true success story, countries must be more than just exporters, but users throughout their economies. This will lead to an improved quality of life and economic enhancement.
The World Gas Conference will be held soon in the US. What are your expectations for this event?
It is going to be a great opportunity for the gas industry to talk about our successes and what the future holds. We have roughly 650 speakers, 100 sessions and speakers from over 50 countries, including ministers from across the globe. This will allow for robust discussion among political policy makers, including great representation from the US.
Furthermore, we are going to see for the first time a broad interaction with the environmental community. This, coupled with our other diverse group of stakeholders, will give a more holistic discussion, rather than just the gas industry speaking between themselves.
What are your final comments about the gas industry for our audience?
First, it has been an honor to serve and lead the organization, and after travelling in this role to over 50 nations, it has left me with a strong sense of optimism. What I see is that this is an industry that is committed to the belief that the gas we produce and sell increases the quality of life. We are seeing an enthusiastic and energetic response to work hard towards to not only bring gas to the world, both the developed and developing, but decrease our environmental impact.
Sure, there are challenges, such as helping policy makers fully appreciate what goes into building a modern energy economy, and encouraging fact-based, objective guidance. Leaders must also take into account the massive scale and investment needed to bring energy to the world, and the potential for gas to truly improve quality of life. Enlightened policies provide the framework for stakeholders – investors, energy companies, customers, the NGOs and others- to accomplish their objectives while providing clean, affordable and reliable energy to our fellow citizens. IGU is working hard to accomplish this objective.
– Energy Boardroom