EQT Corp. President and CEO Toby Z. Rice spoke to Hart Energy on the sidelines of CERAWeek by S&P Global to discuss natural gas infrastructure bottlenecks, energy security and the company’s advances on the LNG side of the business.
Pietro D. Pitts: The U.S. produces around 100 Bcf/d of natural gas, of which 20% is exported. Do you think there are bottlenecks to slow growth in both of those figures?
Toby Z. Rice: Call it growth. Call it realizing our full potential. It’s being significantly thwarted by our inability to get energy infrastructure built in this country. And that's translated to situations where we have the largest gas field in the world—being in Appalachia: the Marcellus and Utica—being constrained. Appalachia is the poster child for showing where pipelines have been blocked, canceled or opposed. We've seen over 7 Bcf/d of natural gas pipelines be canceled over time. Thankfully one pipeline, Mountain Valley Pipeline (MVP), which will supply 2 Bcf/d of takeaway capacity is going to get completed. But it's a sad state of affairs that it required an act of Congress to get that pipeline built. I think Americans would be really upset if they realize it takes an act of Congress to get a piece of energy infrastructure built in this United States.
If we can get this figured out, then we can share these amazing benefits with the world and provide the world with their energy security, and also provide the world with a pathway to lower global emissions. Both of those things are going to help the United States. Obviously, lowering global emissions is allowing the United States to help the world meet their climate goals, which we care a lot about.
But from an energy security perspective, people need to understand that world security is our security because the world can only contain so much chaos before it starts spilling over and impacting Americans. And you look at the world right now, rampant inflation, war in Ukraine, energy security is crippled and energy poverty is increasing. Their security is our security, and we need to take this seriously, and Americans need to know that exports mean surplus, and surplus means lower volatility, and surplus means energy security for Americans. This is a really unique opportunity where we can leverage our natural resources to help allies around the world and also help Americans.
PDP: In terms of LNG, do you want to be a bigger player in that market?
TR: Yeah, so right now, EQT produces about 6 Bcf/d of natural gas, about 1.3 Bcf/d that goes down to the Gulf Coast and has access to the LNG corridor. Now, we've said it could make sense for us to have 10% of our volumes exposed to international pricing. To date, what we've done is we've signed up for about 5% of our natural gas volumes through LNG facilities, Commonwealth, Lake Charles and Texas LNG, about 2.5 million tonnes per annum (mtpa). We're going out now and dealing directly with buyers of gas and offering them true energy security, which is what we believe they truly want. Not just LNG supply, but LNG supply with guardrails on pricing. That's how you can provide energy security, because if you're a buyer just tying your supply to an index price, well, what happens if there's another geopolitical event in the world and that index goes through the roof? You don't have your security.
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TR: What EQT can offer in exchange for some floor pricing that allows us to get the gas out of the ground through the pipelines and through the LNG facility—which is unique to EQT, because we are an integrated energy producer—is control [over] the cost of that full chain. Now with the LNG tolling facilities, which was the final piece of the puzzle, we know what price we need in order to justify us making the supply available. In exchange for that, we can offer caps on pricing, which is going to give the world true energy security, which is what we think is going to be in high demand coming forward.