Published on March 4th, 2014 | by Tina Casey3
Ukraine-Russia Conflict Puts Pressure On US Natural Gas Exports
March 4th, 2014 by Tina Casey
We were just noting a couple of big developments in the movement to curb natural gas fracking in US communities when along comes Rep. Paul Ryan (R-WI) with a push in the opposite direction: export more natural gas in order to bolster international sanctions against Russia for its aggression in Ukraine.
In other words, more fracking!
Well, Rep. Ryan is not alone. The US natural gas industry and its supporters are very excited right now about the potential for a huge new market for natural gas in Ukraine and elsewhere in Europe, so let’s see how that’s shaking out.
The Ukraine-Russia Conflict And US Natural Gas Exports
Let’s pause right here and note that US gas producers require a federal permit to export gas. Increased exports also require more export terminals. There are currently several new proposed terminals in the pipeline but the one farthest along won’t be ready for use until 2015.
The Obama Administration has been enabling additional natural gas exports, much to the dismay of environmental stakeholders concerned about local negative impacts from increased domestic fracking. Global greenhouse gas emissions related to the natural gas infrastructure are also a concern.
Since fracking wells deplete far more quickly than conventional wells, the US gas industry is already forced to drill thousands of new wells each year to keep production up, leading to pushback from local communities concerned about threats to local property values among other issues.
Domestic manufacturers and utilities in the US are also generally not too pleased with the prospect of increased exports, as that puts upward pressure on domestic energy costs.
However, the US natural gas industry is not pleased with the slow pace of the permitting process and it has been lobbying aggressively to step up the pace. In the context of the Ukraine-Russia conflict, here’s the score so far in favor of exporting more gas.
Last night our friends over at The Hill logged Rep. Ryan along with Representatives Fred Upton (R-MI) and John Hoeven (R-ND) as first out of the box to tout more US liquid natural gas exports as a show of strength on the international stage. As Rep. Hoeven explained:
Expanding U.S. LNG exports is an opportunity to combat Russian influence and power, and we have an energy diplomacy responsibility to act quickly…The Department of Energy’s approval process for LNG exports is unnecessarily putting our allies at the mercy of Vladimir Putin. Now is the time to send the signal to our global allies that U.S. natural gas will be an available and viable alternative to meet their energy needs.
This morning, Bloomberg cited support for more natural gas exports from Christopher Guith, vice president for policy at the U.S. Chamber of Commerce’s Institute for 21st Century Energy, and Dan Whitten, of the Washington based America’s Natural Gas Alliance.
Ukraine Poised For Its Own Fracking Boom
Hopefully the situation in Ukraine will cool off before emergency measures need to be undertaken, and so far at least Russia has not threatened to cut off its natural gas supplies to that country.
Part of the reason for withholding the threat of a cutoff could be that Russia has played that game in the past, leading both Ukraine and the rest of Europe to reduce their dependency on Russia’s vast natural gas reserves.
Back on February 28 Forbes reported that Russia’s national gas company Gazprom has already been cutting its prices to Ukraine to compete with other existing suppliers.
Speaking of those other suppliers, with alternative sources potentially in hand it’s not so obvious that additional supplies from the US would create any additional leverage in terms of international sanctions.
Looking to the future, Ukraine also has significant potential within its own borders. Several big fossil fuel development projects are on hold now but they could bubble up again in short order. According to Forbes:
…Late last year [Ukraine] signed shale gas accords with Chevron and Royal Dutch Shell; each will invest $350 million in five-year exploration programs and $10 billion for development in the western part of the country…
The ousted government had also been negotiating with a group led by Exxon Mobil, which wants to explore for oil and gas in a deep-water block in the Black Sea.
Renewable Energy And Ukraine
With those developments in mind, the Forbes article makes the point that exporting energy in the form of actual fuel – gas, oil, or coal – is really old school. In the present-day global energy market the movement is to export experience and technology, and that applies equally to renewable and fossil energy.
As for the solar power potential of Ukraine, one of the largest solar farms in the world happens to be in the current epicenter of the Ukraine conflict, Crimea.
Ukraine is also active in the wind industry with the founding of the Ukrainian Wind Energy Association in 2008, which lists among its global partners Vestas, Gamesa, Nordex, Siemens, and Arzinger.
We don’t see too may US companies on that list, but that could soon change.
If the US is serious about helping Ukraine cut ties to Russia’s fossil fuels into the future, exporting US technology and know-how will go a lot farther than extra shipments of liquid natural gas.
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