Peak Oil is You
Donate Bitcoins ;-) or Paypal :-)
Page added on March 19, 2014
U.S. natural gas to Europe? Not so fast…
European nations are begging the United States to send them natural gas to blunt dependence on Russia, but a lack of infrastructure and market realities are calling into question America’s ability to flex its new muscles as the world’s leading energy power.
The crisis in Ukraine is deepening European alarm over reliance on Russian energy, a weapon that Russian President Vladimir Putin uses to wield economic and political power. Western nations have begun imposing minor sanctions on Russia but aren’t hitting Putin where it really hurts, the energy trade, because Europe relies on Russia for some 30 percent of its natural gas and needs the energy.
Some congressional Republicans claim the key to countering Putin lies beneath Americans’ feet. The United States is in the midst of an oil and gas boom fueled by “fracking” _ a mining process called hydraulic fracturing _ and has overtaken Russia as the world’s top natural gas producer. But little of that American natural gas is sent abroad.
Rep. Cory Gardner, R-Colo., is pushing a bill to accelerate federal approval of export terminals, saying it would unlock U.S. natural gas supplies “to help free Ukraine and other European nations from Russia’s influence.” House Speaker John Boehner, R-Ohio, argues that Putin is happily exploiting the lack of U.S. natural gas exports in order to finance his geopolitical ambitions.
But while calls for such a Berlin-airlift-style approach to rush American natural gas to Europe and liberate it from the Russians makes for a good political sound bite, such a move isn’t practical and vastly oversimplifies the issue. It would take years to build the necessary facilities on both sides of the Atlantic for shipping and receiving the liquefied natural gas. The countries most reliant on Russian energy, including Ukraine, have no terminals for receiving LNG tankers. They get their natural gas from pipelines.
“The potential in the short term is nothing,” said Edward Chow, an energy and security analyst at the Center for Strategic and International Studies.
There are also the realities of the free market. The U.S. Department of Energy has so far approved six applications for natural gas export terminals, but most of that gas is destined for Asia, where prices are far higher and companies can make more money than selling it in Europe.
Longer term, it’s not clear how price-competitive U.S. liquefied natural gas would be in Europe after the cost of transport is factored in, said Tim Boersma, an energy expert at the Brookings Institution in Washington. The American natural gas in Europe would have to compete against supplies from places such as Russia, Norway, Algeria, even the Netherlands and the United Kingdom.
“There’s no assurance the natural gas would go that way anyway given how high (natural gas) prices are in Asia,” said John Kilduff, a veteran analyst at energy trader Again Capital in New York. “That’s not a well-supplied global market, either.”
American natural gas exports still could diminish Russian power, however, even if those exports go to Asia and not Europe, according to Elizabeth Rosenberg, director of the energy security program at the Center for a New American Security.
That’s because it could lead other countries that would otherwise ship to Asia to send natural gas to Europe instead. For example, it could make sense for Middle Eastern and African nations to get more involved in the European market in the face of competition from U.S. energy exports to Asia. Any non-Russian natural gas that goes to Europe lessens Russia’s ability to dictate the price.
The crisis in Ukraine is already accelerating European efforts to get away from Russian natural gas, Rosenberg said. Poland is especially pushing to develop its own shale gas through fracking, and last week it offered six-year tax breaks to speed exploration and reduce its reliance on Russia.
Ukraine also is home to substantial shale gas reserves and has deals with Chevron and Shell in an effort to develop them.
Coal, much of it from America, also is growing in favor in Europe. European power plants could upgrade their technology and install dual-use boilers that would allow them to generate electricity from imported coal as well as natural gas. That would be attractive to coal exporters in both the United States and its rival coal-mining nation, Australia.
“It’s a much more polluting product, and it will make the Europeans nervous, but that is the only readily available alternative over the next few years,” said Patrick Clawson, a sanctions and energy expert at the Washington Institute for Near East Peace.
Exports of U.S. bituminous coal totaled 117 million tons last year, after rising to 125 million tons in 2012. Both years were well above historical averages, and Europe is the top destination for U.S. coal exports, much of it going to the Netherlands and Italy.
Russia has the advantage of a well-established pipeline network into Europe, but it stands to suffer greatly if Europeans do manage to come up with alternative energy sources.
Russia depends on Europe for 90 percent of the natural gas export revenues that it badly needs, said Chow, the analyst at the Center for Strategic and International Studies.
“So who has got leverage on whom?” he asked.
McClatchy Washington Bureau kansascity.com
30 Comments on "U.S. natural gas to Europe? Not so fast…"
rockman on Wed, 19th Mar 2014 6:49 pm
It’s easier to understand the situation if we look at the actual numbers. yes…the US produces a lot of NG. But it also consumes a lot of NG. beyond our consumption there’s very little NG to export even if we had already built a lot of LNG plants.
2013 US NG production: 24,279,569 million cubic feet
2013 US NG consumption: 26,034,354 million cubic feet
2013 US NG exports: 1,572,351 million cubic feet
2013 US NG imports: 2,883,115 million cubic feet
2013 US LNG imports: 96,589 million cubic feet
2013 US LNG exports: minimal
With regards to: “So who has got leverage on whom?” Russia is developing significant export capabilities to the far east. The EU isn’t developing any significant amount of LNG import capability from anywhere elss.
GregT on Wed, 19th Mar 2014 6:51 pm
“America’s ability to flex its new muscles as the world’s leading energy power.”
No point in reading this BS any further.
paulo1 on Wed, 19th Mar 2014 6:54 pm
There are only a few solutions to this ‘crisis’ for Europeans.
1) Turn down the thermostat.
2) Put on a sweater.
3) Apologize to Russia for meddling in Ukraine.
3) Kick someone’s ass for selling all North Sea energy resources when the prices were low.
4) All of the above.
Think of it as a dry run for when declines really bite.
Paulo
keith on Wed, 19th Mar 2014 6:56 pm
The Ukraine situation is all about convincing European’s to embrace fracking in their respective Countries.
nemteck on Wed, 19th Mar 2014 7:07 pm
“There’s no assurance that [US] natural gas would go that way [Europe] anyway given how high prices are in Asia,” “said John Kilduff……”
“…….could lead other countries that would otherwise ship to Asia to send natural gas to Europe instead.” Now why would they do that? The US send gas to Asia and in turn other countries abandon that lucrative market out of good will?
rockman on Wed, 19th Mar 2014 7:13 pm
And I should have added the EU NG consumption figure to put it all into the proper perspective: 18,700,000 million cubic feet per year. So supplying the EU with just half its NG consumption the US would have to export 38% of its NG production. Of course, that ignores the fact that the US currently can’t meet its current demand for NG by our own production: we had to import 1,754,785 million cubic feet in 2013 to meet domestic demand.
IOW it’s rather ridiculous for a country that is a net importer of NG to think they can become an exporter that will hurt the market for Russian NG. Again, it ain’t rocket science: despite all the foolish hype about how much NG we’re getting from the shales according to the EIA we are only producing 93% of our domestic NG demand. All I can assume is that the idiots talking about such potential to punish Russia by flooding the market with US NG is that they haven’t even looked at the numbers because even a 12 yo can tell that 26,034,354 is a larger number than 24,279,569.
But don’t misunderstand me: I’m all for importing a lot of US LNG to the EU: anything that would double or triple the price I get for my production is just fine with me. LOL.
Davy, Hermann, MO on Wed, 19th Mar 2014 7:33 pm
Thanks Rock for the great data!
Northwest Resident on Wed, 19th Mar 2014 8:42 pm
keith — “The Ukraine situation is all about convincing European’s to embrace fracking in their respective Countries.”
I thought that for a while too. But when I consider the possibility that fracking in Europe might consume as much or nearly as much energy as it produces, I have to wonder if TPTB and oil companies are really trying to psychologically manipulate European attitudes, or if there are other better speculations about what is happening in Ukraine.
GregT on Wed, 19th Mar 2014 11:45 pm
I heard there’s big potential for fracking in Paris.
DC on Thu, 20th Mar 2014 12:13 am
Q/European nations are begging the United States to send them natural gas to blunt dependence on Russia.
ROFL, they are? Since when? As the old saying goes, Pass whatever your smoking around….
@Greg. Actually, Chevron heard there was great ‘potential’ in Ukraine too. A place with a pliant, extreme right gov’t installed by the uS would insure Chevron could strip-mine and frak to its heart content, with little fear of ‘bad press’. I guess its still to be seen if they get their wish or not.
rockman on Thu, 20th Mar 2014 2:15 am
“The Ukraine situation is all about convincing European’s to embrace fracking in their respective Countries.”
I can’t see the connection. If one considers the Russians to have escalated the situation why would they encourage their buyers to develop their own resources? And the Ukraine gov’t” The get paid to transship to the EU. So who else would have pushed the crisis to get frac’ng going…Halliburton? LOL.
Makati1 on Thu, 20th Mar 2014 2:56 am
Russia knows exactly what it is doing and the US is frustrated by it. The Bear is blocking the Donkey/Jackass from getting his own way. About time!
As I have seen many say: “The US is playing checkers while Russia is playing multi-level chess. And China is sitting on the sidelines for now, trying to not have their Tibet problem surface.
Arthur on Thu, 20th Mar 2014 3:03 pm
And China is sitting on the sidelines for now, trying to not have their Tibet problem surface.
Not anymore. News just in:
http://www.spiegel.de/politik/ausland/militaerbuendnis-china-und-russland-naehern-sich-strategisch-an-a-959430.html
Hinter den Kulissen arbeiten Moskau und Peking bereits an Plänen für ein militärpolitisches Bündnis – eine Allianz, die die Kräfteverhältnisse auf der Welt dramatisch verändern kann.
Behind the scenes, Moscow and Beijing are working on a full blown military alliance that could dramatically change the global balance of power. We have just pushed Russia into the arms of the Chinese, where Europe should have built an alliance with Russia. If this is getting real, the disaster is complete and a new situation is developing, potentially worse than that of the USSR.
Davey on Thu, 20th Mar 2014 3:06 pm
Arthur China is in a death spiral of a deflating debt bubble. I don’t expect much from them other than damage control
Arthur on Thu, 20th Mar 2014 3:27 pm
It is a very American mode of thinking to assume that money/debt is everything. The US in the thirties, until 1940 were in a deep depression, but rose to planetary pole position in 1945 regardless, because it was an industrial super power.
Money = stupid paper, that can be printed.
Debts can be cancelled.
IOYs can be turned in to IOY nutting.
All that matters in geopolitics is people, land, motivation and resources.
Arthur on Thu, 20th Mar 2014 3:32 pm
And whose fault is this Ukrainian disaster?
http://www.salon.com/2014/03/18/iraq_war_architect_bill_kristol_complains_about_american_war_weariness/
These people will bravely fight until the last American… until you stop letting them.
Davey on Thu, 20th Mar 2014 3:36 pm
Arthur you are brilliant with current geopolitical discussions. You know we don’t often agree but I appreciate seeing a good explainations of alternative ideas and positions. Yet, Arthur what you said above about finance and economics is way way off the mark, sorry in total disagreement
Arthur on Thu, 20th Mar 2014 3:54 pm
I am amazed that the ‘Grey Old Lady’ just let John the Jews are too powerful Mearsheimer ventilate his opinions regarding the Ukraine:
http://www.nytimes.com/2014/03/14/opinion/getting-ukraine-wrong.html?_r=0
What’s happening here? Is the American left backing off from the NWO?
Boat on Thu, 20th Mar 2014 3:55 pm
Republicans are the first to support the idea of war and the first to gripe about debt. And 1/2 of the country supports them.
rockman on Thu, 20th Mar 2014 3:57 pm
Arthur – I don’t think the developing relationship between china and Russia should be a big surprise to anyone. One is the largest producer of oil/NG on the planet and the other will likely be the largest consumer of both not to far down the road. And despite some difference both govt and business models are fairly similar. And then add the common border connection. Probably the only thing that has prevented this relationship being tighter today is that China didn’t start making their big move into energy until the last 10 years or so.
Arthur on Thu, 20th Mar 2014 4:30 pm
rockman, this could turn in a complete disaster for Europe:
http://deepresource.files.wordpress.com/2012/01/strategicellipse.png
The US is to a large extent self-sufficient when it comes to fossil fuel, but Europe not so. The US are not going to make sacrifices for Europe in this respect.
Meanwhile the US is losing grip in the ME. KSA could be taken over soon by Sunni radicals first eliminating US presence. Than all the oil sources of the ME could be taken over by Iran/Russia/China militarily.
Arthur on Thu, 20th Mar 2014 4:40 pm
The only weak spot is that deep in it’s heart Russia would have preferred to form an alliance with Europe. In Putin’s own words:
http://deepresource.wordpress.com/2012/06/23/russia-plays-the-european-card/
But he said these words two years ago, before the Ukrainian crisis. By tearing away the Ukraine, the West has crossed the red line. The US lead West’s open ambition is to destroy Russia, leaving Russia no other option than to seek protection from the West with China. China will not munch Siberia as long as the danger from the West remains credible. What happened over the past few weeks in the Ukraine strengthened US leverage over Europe enormously. Maybe that was the goal all along.
Stilgar Wilcox on Thu, 20th Mar 2014 5:11 pm
The tale of the tape was actually what happened: Russia annexed Crimea and received some sanctions on some high level Russians.
That shows just how weak the US & EU position has become. But that didn’t stop enraged, emotional politicians from pushing the idea of supplying the EU with US NG, in spite of a lack so far of net extra NG to export. But maybe we should go nuts and frack as much NG as we can, to export to the EU, transition to a much higher percentage of NG transport and eliminate the remainder of coal use for electrical supply with NG. We can run through that supposed 100 year supply in 10 years if we just put our minds to it! sarc/
Davy, Hermann, MO on Thu, 20th Mar 2014 5:37 pm
Arthur said – Meanwhile the US is losing grip in the ME. KSA could be taken over soon by Sunni radicals first eliminating US presence. Than all the oil sources of the ME could be taken over by Iran/Russia/China militarily.
Arthur, don’t follow your thinking…..Iran/Russia/China militarily take over ME. Sunni radicals will submit to Iran and will allow infidels (China/Russia) into ME?-NOPE- Further, Russia has no need of ME oil. China is in an economic death spiral of debt bubble deflation at the moment. Russia is going to shoot itself in the foot economically with its Ukrainian adventure. China has a puny blue water navy barely able to project power off its own shores. Come on Arthur get real here!
Northwest Resident on Thu, 20th Mar 2014 6:20 pm
“By tearing away the Ukraine, the West has crossed the red line.”
And an accurate assessment of the situation leads one to conclude that the West tore away Ukraine from Russia? And crossed the red line?
Really???
Come on, Arthur. It is all just political theatrics and media hype to cover for what is really going on — borders are being solidified and past wrongs (giving Crimea to Ukraine) are being righted. How do you arrive at such radically conspiratorial conclusions?
Arthur on Thu, 20th Mar 2014 6:30 pm
1) Russia can sell all it’s oil & gas, that it usually sends to Europe, to China
2) China can send a lot of it’s production to Russia, it used to send to the US for free (for green paper)
3) the US used to be the master in the ME. It still holds KSA, but that relationship is crumbling. By invading Iraq, the US unleashed Shi’ite Islam and de facto handed over Iraq to Iran. And the US failed to topple Russian ally Syria. Result: KSA is in panic for the simple reason that KSA’s Shi’ites start to smell blood (because they now feel backed by the enormously strengthened Shi’ite power position thanks to the brand new Tehran-Bagdad-Damascus axis) AND Sunni Jihadis (MB) smell blood as well and have designs on the House of Saud. Furthermore, US grip on Egypt is waining as well; it is just the Egyptian military they have under control. For how much longer is the military willing to potentially have to shoot it’s own population? Conclusion: the future of the ME is Sunni Caliphate (Ankara-Damascus-Cairo axis) and Shi’ite empire (Tehran-Bagdad and both sides of the Gulf, that is all the oil, back by the almighty Moscow-Beijing axis). Western presence will be completely eliminated and the Arabs will have the same anti-western attitude like all the blacks have, who keep whining about slavery, 150 years after the fact. And yes: in case of war between the West and the East, SCO can take over the entire ME militarily, or at least that part of the ME that counts, namely with fossil fuel sources.
4) America is a paper tiger militarily, so much is clear after Vietnam, Iraq and Afghanistan. The US has indeed impressive hardware, that can be used to kick a third rate army like that of Iraq out of Kuwait, but that is about it. Furthermore, both Russia and China have supersonic missiles, making the entire US navy obsolete in a direct confrontation. And these missiles can be delivered to proxies like Iran as well. Navies are so 20th century.
Davey on Thu, 20th Mar 2014 7:12 pm
Never mind Arthur, your out there today in a dream or something. We can just agree to disagree
longtimber on Thu, 20th Mar 2014 10:54 pm
From Rocks post above:
“2013 US NG production: 24,279,569 million cubic feet
2013 US NG consumption: 26,034,354 million cubic feet
2013 US NG exports: 1,572,351 million cubic feet
2013 US NG imports: 2,883,115 million cubic feet
2013 US LNG imports: 96,589 million cubic feet
2013 US LNG exports: minimal ”
IS this EIA data? Where can one ref such?
Love the look on people faces when I mention that US was yet again a net NG importer in 2013. And on top of the fact that much Nitrogen Fertilizer is now imported. Gotta save the NG for the Hot tub(s).
rockman on Fri, 21st Mar 2014 11:55 am
IS this EIA data? Where can one ref such? Yes. Here you go: this link will bring you to US NG exports. Just keep flipping through the EIA site fpr the other numbers.
http://www.eia.gov/dnav/ng/ng_move_expc_s1_m.htm
Willem Post on Sun, 23rd Mar 2014 10:19 pm
Rockman,
These numbers are higher than the ones you show. Any explanation?
US NG production was 25.64, 26.06, 26.82, 28.48, 29.54, 30.17 Tcf for the 2008 – 2013 period
http://www.eia.gov/todayinenergy/detail.cfm?id=15411