Energy transfer (NYSE: ET) currently owns one of the largest energy infrastructure companies in North America. The limited partnership (MLP) operates a fully integrated franchise that moves oil and gas from the well to the market centers. It carries more than 25% of all natural gas and natural gas liquids produced in the US and 35% of its oil. While this infrastructure is vital to meet the current energy needs of the economy, it is starting to shift from fossil fuels to alternative sources such as renewable energy
Energy transfers must participate in the transition so that they do not die out. That led to it recently launching an alternative energy group to focus more on finding ways to stay relevant if the energy industry shifts fuel sources.
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Evolve with the industry
Energy Transfer has already started cleaning up its act in recent years. The company has focused on reducing greenhouse gas emissions for the past decade. For example, it has installed a dual-drive compression system along some of its natural gas pipelines, reducing carbon dioxide emissions by more than 632,000 tons last year alone. The company also recently supported construction of the Maplewood 2 Solar Project in Texas by signing a power purchase agreement to purchase clean power from that site to offset energy usage. The company also operates more than 18,000 solar-powered monitoring stations across the country. As a result, 20% of the electricity it uses comes from renewable energy.
Energy Transfer’s new alternative energy group will step up its efforts to find new renewable energy projects. The group will focus on finding opportunities to purchase electricity from solar and wind farms or to develop projects with external operators. Those investments will mainly offset the company’s power consumption. The company will also look into renewable diesel and renewable natural gas options when it makes economic sense. These projects would leverage the company’s existing pipeline network as it could reuse some of those assets for renewable fuels.
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Using different approaches
Energy Transfer is the latest fossil fuel-focused company to announce plans to increase its participation in the energy transition. Earlier this month oil giant ExxonMobil (NYSE: XOM) plans revealed to launch a new company to commercialize its low-carbon technology portfolio. Exxon initially plans to focus on carbon capture and storage projects, although the company also said it would consider other opportunities, including hydrogenExxon plans to invest $ 3 billion in lower-emission energy projects through 2025. However, that’s just a drop in the bucket for a company that plans to invest as much as $ 25 billion a year during that period.
Meanwhile, energy infrastructure manager Morgan children (NYSE: RMI) revealed how it is the transition to the future of energy earlier this year. It is already involved in the storage, handling and blending of liquid renewable transportation fuels such as ethanol and biodiesel in the product pipelines and terminal segments. However, it sees ripe opportunities for expansion into renewable diesel. Kinder Morgan also believes it can expand into adjacent markets by blending hydrogen into its existing natural gas network and transporting and sequestering carbon dioxide. Meanwhile, sees longer-term potential in hydrogen and renewable diesel production and joins Exxon in the carbon capture market. The company believes so converts much of its existing infrastructure network to transport and store the fuels of the future.
Meanwhile, other energy companies are taking more courage to seize opportunities in the energy transition. For example, the Canadian giant in energy infrastructure Enbridge (NYSE: ENB) currently derives about 4% of its revenues from renewable energy sources. Among other things, it operates 22 wind farms, seven solar parks, six facilities for renewable natural gas and a hydrogen factory. Enbridge expects to invest $ 2 billion Canadian ($ 1.6 billion) through 2023 to build additional offshore wind farms in Europe and spend an additional approximately CA $ 500 million ($ 393 million) on self-sustaining renewable energy projects in North America. It has several other renewable energy projects in development and other opportunities, such as carbon capture and storage projects, and projects targeting hydrogen and renewable natural gas further down the pipeline.
An important first step
Energy Transfer puts more emphasis on discovering its role in the energy transition. It starts small by looking at making more of its existing infrastructure self-sufficient with renewable energy and exploring ways to use those assets to transport renewable fuels. But now that the energy transition is accelerating, the company will have to do even more. If not, it runs the risk of falling behind rivals such as Enbridge who are already seizing opportunities to create value for their investors by taking the lead in helping the global economy switch flows.
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