Page 7 - NorthAmOil Week 28 2021

NorthAmOil COMMENTARY NorthAmOil

Producers that are
turning to RSG are
hoping that utilities will
increasingly seek to buy
cleaner gas.

major shale basins. This comes as a growing “We don’t expect to pay a premium, we don’t
number of producers are committing to certi- expect to collect a premium” for gas certified
fying their output as RSG. In late June, another as greener, Cheniere’s chief commercial officer,
major shale gas player, Southwestern Energy, Anatol Feygin, was quoted by Reuters as saying.
signed an agreement to obtain RSG certification If this happens, it would create a more level
across its Appalachia operations with Project playing field among gas producers, who have
Canary. Separately, EQT – the largest Appala- struggled with gas gluts and price downturns
chian gas producer – recently launched a pilot over the past decade and are fighting to retain
project to certify some of its output. a competitive advantage. Pressure from share-
LNG producers on the Gulf Coast are also holders means the pursuit of environmental tar-
turning to RSG, with Cheniere Energy and Nex- gets will need to be balanced with profitability.
tDecade both among the companies considering That said, some producers increasingly believe
low-carbon certifications. Last month, Cheniere that focusing on environmental targets and
announced it would collaborate with five US gas cleaner products will help them remain compet-
producers – including EQT – and certain aca- itive far into the future. Those turning to
demic institutions to implement quantification,
monitoring, reporting and verification (QMRV) What next? RSG also face
of GHG emissions at production sites. The arrival of RSG comes as natural gas remains the challenge
Reuters reported in late June that gas certi- popular for power generation – indeed, US
fied as “responsibly produced” and contribut- power plants consumed a record amount of gas of a lack of
ing fewer emissions could cost up to 5% above in 2020 – but increasingly faces competition
market prices, or up to $0.15 per 1,000 cubic feet from wind and solar generation. standardised
($4.25 per 1,000 cubic metres), according to sup- Those turning to RSG also face the challenge
porters of RSG. Thus far, not many customers are of a lack of standardised measures for such gas measures for
reported to be willing to pay the premium, but thus far – though this is likely to change over such gas thus far.
producers hope that this will change as utilities time as the practice of certifying gas becomes
and gas exporters try to demonstrate their own more mainstream.
environmental credentials. While no US utilities have started purchasing
Reuters cited executives at gas production RSG on a routine basis as yet, some are starting
companies as noting that utility regulators to turn to such gas for parts of their operations.
who approve rate increases for gas purchases This includes Sempra Energy’s Southern Califor-
have yet to consider GHG emissions in their nia Gas (SoCalGas) unit, Xcel Energy and New
price reviews. The news service also noted that Jersey Natural Gas. It would not be surprising if
Cheniere believes cleaner gas may ultimately more utilities started using RSG as the certifica-
become a requirement for producers and tion of gas becomes more widespread over the
exporters. months and years ahead.™

Week 28 15•July•2021 www. NEWSBASE .com P7