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Remarks of Assistant Secretary for Fossil Energy Steven Winberg as prepared at the North American Gas Forum in Washington, D.C. on October 22, 2019.

 

Thank you.

 

It’s great to be here today, and I appreciate the opportunity to talk about what the Department of Energy is doing to develop our extensive natural gas resources and expand the benefits of the shale gas revolution.

 

This is an exciting time for energy development in North America – and especially here in the United States.  We are unlocking abundant domestic energy sources that were once thought too difficult or too expensive to try to develop. 

 

The phenomenal growth in oil and gas development — both conventional and unconventional — is changing the energy landscape in America and around the world.

 

Who could have guessed, a few years ago, that the U.S. would be the top global producer of both oil and gas?  Today, we are.

 

And last year, we recorded one of the largest increases in petroleum and natural gas production by a single country – ever – in history.

 

Who would have thought that the U.S. — for so long an importer of natural gas — would become a net exporter?  The U.S. became a net exporter of natural gas in 2017 for the first time since 1957 – and we’re on track to become a net energy exporter by next year. 

Our energy success story is strongly supported by this Administration’s policies. We want to unleash the full potential of America’s fossil fuel resources, and we’re putting innovation ahead of over-regulation.

 

And this Administration has expanded new global markets for American energy resources.  Here’s a snapshot of the impact American natural gas and LNG are having on global gas markets.

 

Currently, there is over 7 billion cubic feet per day of LNG export capacity online across 5 large-scale export projects, and 3 additional export projects are under construction.  In total there is 15 and a half billion cubic feet per day of natural gas export capacity in operation or construction across eight large scale LNG export projects in the U.S.

 

By 2024, the International Energy Agency expects that the United States will overtake Australia and Qatar as the largest LNG exporter in the world. In fact, there is so much new activity related to LNG exports that the Federal Energy Regulatory Commission announced the opening of a Houston regional office to help address the increasing workload related to LNG exports.

 

To date, the Department of Energy has authorized the export of more than 38 billion cubic feet per day of natural gas, primarily spread across 15 large-scale projects in Louisiana, Texas, Maryland, Georgia, Mississippi, and the Gulf of Mexico. 

 

Since January 2017, the amount of LNG being exported has more than doubled – from just over 1.7 bcf/d to nearly 5 bcf/d.

 

And U.S. LNG cargoes have reached 36 countries on five continents so far. 18 of those countries have become customers since President Trump took office.

 

But we want to expand the markets for U.S. natural gas even more.  And one of the ways we’re doing that is through a rule we issued last year to expedite the permitting of small-scale exports of natural gas, including LNG.

 

Small-scale LNG cargoes can be imported by countries where there are practical or economic limitations to accepting larger scale exports. Small-scale LNG will help our trading partners in in the Caribbean, Central America and South America, where there is a significant demand.

 

And, using his executive authority, President Trump has taken important steps to expand our energy exports.

 

Earlier this year, he issued two important Executive Orders removing barriers to energy infrastructure development, and to allow LNG to be transported by rail. 

 

The President also ordered a report on the limitations hindering the export of natural gas and other energy resources from the U.S. West Coast.

 

These Executive Orders are a major step toward removing unnecessary red tape, streamlining and modernizing the regulatory process, and promoting an even more efficient energy market.

 

And they will help provide the certainty the private sector needs to invest in critical energy infrastructure projects.

 

That brings me to another chapter in this shale gas story – it’s being written in Appalachia, where the shale revolution has created a potential renaissance in American manufacturing.

 

As you know, a lot of Appalachian shale gas contains substantial volumes of natural gas liquids or NGLs, including ethane, a key chemical feedstock for ethylene. That’s a key building block of the plastics found in almost every product we use in daily life. Cars, appliances, electronics, medical products – and even wind turbines – utilize plastics.

 

Right now, over 95 percent of America’s ethylene production capacity is located in Texas and in Louisiana. Appalachian shale gas is shipped many hundreds of miles to be processed there.  But when a hurricane hits, the petrochemical manufacturers feel it – financially.

 

And so does the natural gas producer at the other end of the supply chain.

 

That’s why it makes sense to consider making the petrochemical supply chain shorter – and to bring the manufacturing home to Appalachia. Its abundant supply makes the region an attractive location for the build-out of an Appalachian petrochemicals industry. 

 

Now, let me be clear – Appalachian petrochemicals are not a competitor, they are a complement to production capacity in the Gulf region.  Gulf Coast capacity is massive; it’s strategically located to meet the expanding global market. It’s critically important to American manufacturing and the U.S. economy.

 

But providing geographic diversity will make the petrochemical and plastics manufacturing supply chain more reliable.

 

A DOE report shows Appalachia could offer a highly competitive advantage and help the U.S. gain global petrochemical market share.

 

DOE’s Energy Information Administration projects that in the next five years, ethane production in the Appalachian Basin will reach 640,000 barrels per day – 20 times greater than it was in 2013.

We’re seeing investors become aware of just how valuable that resource is, with Shell now constructing a $6 billion cracker in Beaver County, Pennsylvania.  And, there is PTT/Daelim’s planned 10-billion-dollar cracker plant in Belmont County, Ohio. 

 

The big picture for Appalachia includes not only the crackers, but also the derivative processing facilities and downstream manufacturing. All those facilities are the prize. They bring the enormous capital investment, the tax revenue and the family-sustaining, generational jobs.

 

President Trump is excited about the Appalachian petrochemical opportunity.  In August, he visited the Shell ethylene cracker plant to demonstrate his commitment to the Appalachian energy and manufacturing renaissance.

 

As the President pointed out there, the Shell cracker is one of the single biggest construction projects in the nation.  And, to quote his remarks – “it was made possible by clean, affordable, all-American natural gas.”

 

Unlocking that natural gas and the potential that it represents was due in part to the early DOE-supported R&D on hydraulic fracturing and horizontal drilling.  And just as we helped unleash the shale revolution through that research, we’re now pursuing a portfolio of transformative science and innovative technologies to improve our oil and gas development and delivery infrastructure – and expand the benefits of those massive resources. 

 

As you know, DOE’s national labs are the incubators for bold ideas. That’s where the new methods and technologies will emerge to meet the challenges that still remain, both upstream in the development of these unconventional resources, and midstream in terms of infrastructure efficiency.

 

And compared to yesterday’s technology, the latest technology is like going from landlines to smart phones.

 

So here’s a snapshot – we’re now applying machine learning, artificial intelligence, and data analytics to help improve oil and gas recovery, to reduce the costs of production, and to strengthen our delivery infrastructure.

 

And in the process we could usher in another shale revolution without having to drill any more wells.

 

We’ve established a network of oil and gas field laboratories to generate new data for machine learning, and to demonstrate new technologies in actual operating oilfield settings.  We now have a total of 17 field laboratories across the country.

 

Four of those new field laboratories just received more than $44 million in funding. And we recently selected five new projects to receive $40 million to help research and develop enhanced oil recovery in unconventional reservoirs.

 

As you know, natural gas development is closely interlinked with water. So now, let me turn to our research and development on that very important topic.

 

The environmental impact of energy production matters to this Administration. So we recently designed a way to encourage research and innovation about safe, secure and affordable water. It’s called the Water Security Grand Challenge, and it is a framework initiated by the White House, and led by the Department of Energy.

 

As energy and water demands increase, we need to make sure the “produced water” that results from hydraulic fracturing is used as efficiently as possible.

 

The ultimate goal here is to transform the energy sector’s produced water from a waste to a resource.

 

Now, a quick look at the midstream sector, where we’re focused on enhancing the safety and efficiency of our natural gas infrastructure.  We recently made available up to $24 million in federal funding for projects focused on detecting, measuring, and mitigating methane emissions, and on technologies for upcycling flare gas into value-added products.

 

When it comes to R&D, DOE’s Office of Fossil Energy partners with industry, academia, and various research facilities to further new, advanced fossil technologies.

 

And, frankly, we can’t do what we do without those partnerships.  So, we’re in a full court press to get our message out, to tell interested investors and researchers about our many opportunities.

 

We make many Funding Opportunity Announcements over the course of the year; they are the principal mechanisms we use to contract for cost-shared research, development, and demonstration projects.

 

So, we hope you will look at those announcements and take the opportunity to partner with us.

 

In the meantime, I welcome the opportunity to meet with you, and I look forward to our discussions today.