M.I.T. Reality Check: The U.S. Won’t Match Russia’s Gas Exports to Europe for YearsPosted: March 21, 2014
No matter how fast export facilities for liquefied natural gas are approved, it will be years before the U.S. can challenge Russia’s position as a dominant supplier.
Mike Orcutt writes: The crisis in Crimea has prompted calls for the U.S. to ramp up natural gas exports to Europe by quickly approving new facilities capable of liquefying the fuel and sending it overseas. The argument is that this could undermine Russia’s strategic power by reducing Europe’s heavy reliance on Russian gas.
The numbers on natural gas exported to Europe show just how simplistic this argument is. Russia dominates the market, and regardless of the speed of the approval process, it will take several years and tens of billions of dollars of investment for the U.S. to come close to Russia’s exports.
In 2012, pipelines carrying Russian gas supplied 34 percent of all the natural gas sold in the European Union by non-E.U. countries. Several nations, including Bulgaria, Lithuania, and the Czech Republic, rely on Russia to supply over 80 percent of their natural gas needs. Around 80 percent of the gas exported to Europe travels by pipeline; the rest arrives as liquefied natural gas (LNG).
Natural gas exported from the U.S. to Europe must be liquefied at export terminals, a costly process that involves cooling the gas to greatly reduce its volume.
Today the U.S. has only one operational LNG export terminal, located in Alaska, where gas is liquefied before being sent to Japan. The U.S. already exports a very small amount of LNG to Europe. It sent 0.1 billion cubic meters in 2012—too small to be visible on the chart above.
Companies that want to export LNG must apply for approval from the U.S. Department of Energy and the Federal Energy Regulatory Commission. Applications to sell to countries without a free trade agreement with the U.S., which include many countries in Europe, are subject to greater scrutiny, which can draw out the process….Read more…
- Exporting Natural Gas Is Part of the Solution (heritage.org)
- The U.S. Can’t Really Undermine Russia by Exporting Gas (technologyreview.com)
- The gas industry’s shameless new Crimea play (salon.com)
- Europe looks to US, Qatar gas to reduce reliance on Russia (sofiaglobe.com)
- Crimea crisis won’t cut Russia gas flow to Europe, IHS says (fuelfix.com)
- A Gas Export Strategy (online.wsj.com)
- How Europe is turning to North America to wean itself off Russian energy exports (business.financialpost.com)