Jordan Blum, editorial director, Hart Energy: So how does the U.S. unleash the LNG sector? We are here at the Kay Bailey Hutchison Energy Center Symposium in Austin to find out. I'm joined by Toby Rice, the president and CEO of EQT for this Hart Energy LIVE exclusive energy interview. So Toby, tell me the unleashing the U.S. LNG scenario, what is it?
Toby Rice, CEO, EQT: Well, what it is is the biggest green initiative on the planet. It will require the United States to increase natural gas production 50%, to quadruple our LNG exports to over 60 BCF a day, and use that natural gas to replace foreign coal, which is the biggest source of emissions on the planet. And if we can do this, the impact to the environment is incredible. It would be equivalent to electrifying every vehicle in the U.S., putting solar in every house in America, and also doubling U.S. wind capacity. All three of those things combined, it's a major opportunity, and it starts with American natural gas.
JB: And the goal is, like you said, with LNG, essentially funding to production domestic... The utility sector can rely more on gas from a peaker standpoint, right?
TR: Yeah. So there's going to be a lot of extra benefits. Not only are we going to be providing our allies with their energy security for perspective 60 BCF a day of LNG exports is the energy equivalent of adding 10 million barrels a day of clean energy to the world stage. So think about that. That's the equivalent of adding a Saudi Arabia worth of clean energy that's going to be a decarbonizing force for allies. That's one benefit. But exports also means surplus. And surplus means lower prices and lower volatility for gas prices at home.
That certainly is going to help all Americans and also it's going to help our utility customers. But when you think about this situation, exporting 60 BCF a day means that we have 50% surplus natural gas flowing through our pipelines, and that means that natural gas is on standby ready for when Americans need it, and that is how we can backfill and provide unparalleled reliability in dealing with adverse weather events, which we've seen happen in the United States. It can also help us backfill a more enhanced renewables program. It's just a lot of great opportunities that happen when we bring American energy to the forefront of providing global solutions.
JB: Very good. And y'all have net-zero goals in about 10 years, but even just from now you're talking about, I'll let you give the numbers, but you're talking about having this much emissions in order to save this much emissions. Can you elaborate?
TR: The biggest environmental concern that people have about our industry today is methane emissions. And we need to take this seriously and we need to knock methane emissions out of the park, and I'm very confident we're going to be able to do that. One of the ways that we can show the world that we've addressed methane emissions is by putting our money where our mouth is in establishing aggressive net-zero goals. So at EQT, we are going to be net-zero, not by 2050, 2040, 2030, we're going to be net-zero by 2025. And what that means is that we've taken the steps to reduce our carbon footprint organically, operationally, whether that's by electrifying the oil field or replacing pneumatic device programs. And then we're going to be able to replace any of the emissions and offset them with nature-based solutions that we'll be developing in-house.
The reason why this is so important is because we cannot let the conversation be focused on the emissions associated with making our product. We've got to have the conversation about the emissions that are saved when people use our product. So at EQT for example, our carbon footprint is around 400,000 tons. That's what it takes for us to run our business, but that running our business produces amount of product when put on the world stage to replace foreign coal would save over 150 million tons of emissions. So for us to focus the conversation on the benefits of American energy, we're going to be putting net-zero plans in place so that we can focus on what really matters.
JB: Very good. And looking at the Marcellus Utica areas and all, I mean, how do you see U.S. infrastructure reform playing out? I know there's a lot of things still in the works. Mountain Valley pipelines had a lot of roadblocks, but it looks like the finish line is in sight. I guess we could say. I mean, how do you see things going?
TR: Well, current state of play right now is almost every single pipeline has been blocked, canceled, or opposed coming out of the United States. And this has been something that's been recent, only five years old. The only pipelines that get built like Mountain Valley Pipeline are because of an act of Congress. Now, Americans should be looking at this and asking serious questions when they get their energy bills and electricity prices are up and energy prices are up, blocking infrastructure is the root cause of a lot of this uncertainty we've seen in the energy market today. The answer is very simple. It's get back to building things in this country and building more infrastructure, specifically pipelines and LNG facilities. That is going to be how we're going to be able to unleash amazing opportunities like Unleash U.S. LNG on the world stage. And that's how we're going to be able to protect Americans, provide the energy security that they demand, and quite frankly, that they deserve.
JB: Very good. It's rare when you can reference an active Congress and mean it in the literal and not metaphorical sense.
JB: Switching gears just a little bit, y'all just closed on some deal making with Tug Hill XcL. Can you talk a little bit just about how the industry's continuing to consolidate right now and just how you see that continuing to evolve in the years ahead?
TR: When we think about our mission at EQT, and I think a lot of others in industry sort of think about this as they're thinking about shaping their energy businesses, we want to make the energy that we produce cheaper, more reliable and cleaner. And acquisitions, the right acquisitions can be a tool that move us closer towards making the energy we produce cheaper, more reliable and cleaner. With this Tug Hill acquisition, because of the high quality nature of these assets, the Tug Hill assets are going to lower EQT's cost structure by 15 cents. That is going to make the energy we produce cheaper. The inventory that comes along with this deal, the incremental 300 locations, is going to allow us to produce this energy reliably for the future. And from a clean aspect, these assets were really well run, but we're going to be able to include these assets into our net-zero plans and zero out their carbon footprint. So Tug Hill is a great example of how consolidation can make the energy reproduce cheaper, more reliable and cleaner, and how it can fit a major industry focus.
JB: Again, I'm pivoting a bit. Workforce challenges are a big issue for the energy sector right now. We're here at the KBH Energy Center and the symposium today. Can you talk a little bit just about how important it is to participate here and the work going on and just how higher education is working to solve a lot of the challenges?
TR: The energy industry has a massive job and massive service they provide for society. Providing affordable, reliable, clean energy takes a lot of effort and to do it at the scale that we do, 80% of the energy used in this world comes from hydrocarbons. We need the best and brightest to come help us to achieve our higher purpose, which is to provide energy security for the world while also lowering global emissions. There are tremendous opportunities in this industry. It's the most impactful work I think that can be done is going to be done in this industry and it's going to be incredibly rewarding. So we really love to see the interest and are excited about this industry showcasing its higher purpose so that we can continue to attract the best and brightest and join what I think is one of the greatest workforces in industry is right here in the oil and gas industry.
JB: Very good. So you feel pretty optimistic about the work being done, overcoming the challenges and everything associated with the so-called great crew change?
TR: Well, we've made some big progress on just making our organizations more efficient so that it's maybe been a little bit less reliant on workforce. At EQT when we took over it required about 16 million hours of work to drill a hundred wells and produce 1500 BCF a gas. A year later after we came in and we applied our technology, we applied our proven leaders, we applied our combo development approach, basically overhauled the culture of the organization. We drilled a hundred wells, we produced 1500 BCF of gas the same as the year before, but the hours we needed to work went from 16 million hours to seven.
So we saw a massive efficiency improvement in our organization and we've been able to see that efficiency continue to climb over time. But we've got newer, greater things that we want to do. We've got ambitions to make the energy reproduce not just cheap, reliable, clean. We want to see natural gas become cheap, reliable, zero carbon, and that's leveraging new fields or existing technology in a new approach to developing carbon capture is really exciting to give the world what they've never had before, which is the trifecta of energy, cheap, reliable, zero carbon. And that's just one of many amazing opportunities that's going to require us to have the smartest people in the world come join us on this mission.
JB: Very good. Well, thanks again so much for joining us at the KBH Energy Center for this Hart Energy Live Exclusive interview. For more information, please read and watch online at hartenergy.com.
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