US gas boom: A tool against Russian coercion

By Steven R. Hurst

Associated Press

Published: Wednesday, March 12 2014 12:00 a.m. MDT

In this Jan. 14, 2009 file photo, an engineer of the FGSZ Ltd, Hungary's natural gas transporting company, checks the pressure in the pipelines forwarding natural gas from underground storage facilities for the country's capital at a gas receiving station in Vecses, Hungary, near Budapest.

Bela Szandelszky, File, Associated Press

Enlarge photo»

WASHINGTON — The United States, with its abundant supplies of natural gas, would seem to have an easy answer to Europe's fears that a strong response to Russia's rapid takeover of Ukraine's Crimea region could prompt Vladimir Putin to shut down gas lines that keep European homes warm, factories humming and electricity flowing.

Trouble is: Right now there's no way to get meaningful American supplies across the Atlantic Ocean.

Turning U.S. natural gas into liquefied natural gas (LNG), a process that makes the fuel transportable by ship, is very expensive. Beyond that the U.S. government has — until recently — been stingy with permits to build those facilities. And regulations make it difficult to sell U.S. gas to nations that aren't in free trade compacts with Washington.

That's not good news for Europeans, who are dependent on Russia for at least 30 percent of its natural gas. Consequently, Europe's reaction to the Russian seizure of Ukraine's semi-autonomous Crimea, while noisy, has little teeth.

Moscow already has a history of cutting some supplies to Europe. In 2009, Europeans shivered through part of the cold winter because Moscow turned the taps off in a dispute with Ukraine over the price of gas. Some of the pipelines carrying Russian gas pass through Ukraine. And Ukraine is once again in hock to Moscow for $1.89 billion in gas bills.

European dependence on Russian gas no doubt played into Kremlin leader Putin's calculus when his forces took control of the Crimean Peninsula, home to Moscow's Black Sea fleet and 60 percent populated by ethnic Russians. Natural gas is Russia's trump card.

And while U.S. gas supplies might have given Putin pause before he initiated the current crisis, he knew the United States could not quickly make up any shortages.

The crisis in Ukraine is expected to drag on even after Crimea's status is resolved, and Europe could be waiting a while for new exports of liquefied natural gas from the U.S. The first are not expected until late 2015 from a Louisiana facility. President Barack Obama's Energy Department has approved only six LNG export applications in the past four years. All of those, aside from the Louisiana operation, aren't likely to be in operation until 2017.

Twenty-two LNG export projects remain pending. Initial U.S exports, even if they went to Europe rather than pricier markets in Asia, would not suffice to offset Russian domination of the market.

The Obama administration has been determined to use the American energy boom to move the United States away from dependence on imported energy supplies, with many arguments for keeping U.S. natural gas at home. Exports, some argue, would raise the cost for Americans who heat their homes with the fuel and impose higher prices on manufacturers who use the resource to make other products like plastics and fertilizer. What's more, environmental activists contend a booming U.S. export sector would only cause even more fracking — shorthand for hydraulic fracturing — a process that many claim pollutes water supplies and increases greenhouse gas emissions.

Then there's the cost. Russia, using existing pipelines — some of which cross Ukraine — can deliver gas far less expensively than could U.S. companies who would have to undertake the expense of turning the gas into a liquid and sending it by ship to market. And Asians are already paying far more for LNG deliveries than what Europeans spend for Russian gas.

Thus, writes Michael Levi of the Council on Foreign Relations, it is unlikely that a shift in U.S. policy that would exploit exports to Europe, would "deter Putin from using the gas weapon."

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