IEA Executive Director Dr Fatih Birol delivers testimony to the US Senate Committee on Energy and Natural Resources (Image: CSPAN)

“China is going to import a lot of LNG to replace their coal”

The International Energy Agency’s executive director, Dr Fatih Birol, testified before the United States Senate on Tuesday about the agency’s global market outlook, according to a press release.

In his testimony to the Senate Committee on Energy and Natural Resources, chaired by Senator Lisa Murkowski of Alaska, Dr Birol outlined four large-scale shifts in the global energy system that will set the scene for the coming decades, and which were analyzed in detail in the IEA’s recent World Energy Outlook 2017 report.

These four major trends are the rapid deployment and falling costs of clean-energy technologies; the growing electrification of energy; the shift to a more services-oriented economy and a cleaner energy mix in China; and the resilience and further growth potential of shale gas and tight oil resources in the United States.

“During my time here on the committee, we have gone from discussing the need to site LNG import terminals along our coasts to now expediting LNG export terminals. And we have gone from lamenting our reliance on foreign oil, and the steep price of that oil, to the United States being the world’s swing producer in an era of abundant energy,” Murkowski said.

“Technology innovation and the shale revolution have led the way, and the administration is working hard to reduce barriers to energy development. Allowing for increased exploration and production in the United States – as we did last year with the opening of Alaska’s 1002 Area – will provide for our long-term security and allow us to extend our influence in world markets,” concluded Murkowski.

Dr. Birol noted that the U.S. has become the undisputed global oil and gas leader and highlighted the important role Alaska will play in providing energy resources to domestic markets and global allies.

“We have huge deposits of oil and gas in the Arctic region across the world,” Dr. Birol said. “In terms of oil, according to the U.S. Geological Survey, we have huge deposits, especially in the Arctic National Wildlife Refuge area. We see there is a very important attractiveness there, namely the availability of the Trans-Alaska Pipeline, which is underutilized today substantially.”

Murkowski also pointed to the main domestic bottleneck for liquefied natural gas (LNG) – building the infrastructure, such as pipelines and the LNG terminals, necessary to facilitate it. Dr. Birol pointed to the significant marketing opportunities, especially in Asia, given the United States’ geographical advantage.

“China is moving in the direction of gas. They are going to import a lot of LNG to replace their coal,” Dr. Birol said. “From the LNG point of view, I see significant chances to provide gas to gas-hungry Asia.”

As China also moves toward greater use of nuclear power as a part of its energy portfolio, Murkowski asked Dr. Birol for his thoughts on emerging technologies, such as advanced nuclear, and how that might factor into the energy marketplace, specifically in the U.S.

“I think nuclear is a technology worthwhile, which can provide electricity uninterrupted without emitting carbon dioxide emissions,” Dr. Birol said.

“But after Fukushima, it became a challenge in many countries to build nuclear power plants. The challenge is not only there, the challenge is in the financing part of the equation to build nuclear power plants…Small modular reactors can provide the opportunity to address the project management risks and the financing problems, so this can be a solution… In the U.S. and countries where it is accepted, [nuclear] can play an important role for energy security and also for the environmental issues [it] can make a positive contribution.”

In particular, Dr Birol noted the resilience of shale oil and gas in the United States, and the remarkable ability of producers to unlock new resources cost-effectively.

This has pushed the combined United States oil and gas output in 2040 to a level 50 per cent higher than any other country has ever managed.

With the United States accounting for 80 per cent of the increase in global oil supply to 2025 and maintaining near-term downward pressure on prices, the world’s consumers are not yet ready to say goodbye to the era of oil.