Enhance and Grow U.S. LNG Trade to the EU
Posted May 3, 2019
Europe should be a growth market for U.S. natural gas. We share economic and security goals, and it’s important to the U.S. and European Union (EU) that Russia’s use of energy as a political weapon be neutralized.
All of these should foster significant growth in U.S.-EU liquefied natural gas (LNG) trade – much, much more than current levels, which are really just a sliver of the EU’s natural gas needs. There has been progress, but there is potential for the U.S. to supply even more natural gas to the EU. The commission’s Miguel Arias Cañete sounded the right themes:
“Natural gas will remain an important component of the EU's energy mix in the near future as we move towards cleaner sources of energy. Given our heavy dependence on imports, U.S. liquefied natural gas, if priced competitively, could play an increasing and strategic role in EU gas supply.”
In free markets, U.S. energy wins. Our industry believes in that. At the same time, there are a number of enhancements that foster more Trans-Atlantic LNG trade – outlined in this position paper issued jointly by API and the International Association of Oil & Gas Producers (IOGP). From the introduction:
[T]he oil and natural gas industry on both sides of the Atlantic strongly supports efforts to enhance market competition and remove barriers to market entry to ensure the free flow of LNG and LNG related services between the U.S. and E.U.
For the U.S. side, these enhancements include:
- Continued improvements to the federal review processes for U.S. LNG projects, to maintain transparent and consistent approval timelines. Specifically, the Federal Energy Regulatory Commission (FERC) and cooperating federal agencies should expedite a review process that can take three years and cost between $50 million and $100 million.
- A swifter and predictable time frame for U.S. Energy Department (DOE) export approvals to countries without a free-trade agreement, including all European Union nations – acknowledging DOE’s new approvals of the Driftwood project in Louisiana (Tellurian) and Port Arthur project in Texas (Sempra).
- U.S. executive branch agencies expanding efforts to promote U.S. LNG to include EU countries. This could include hosting reverse trade missions and technical workshops, offering business-to-business relationship building events and cooperating on project-specific pre-feasibility studies.
- Executive branch agencies highlighting existing U.S. industry standards and promote streamlined review processes to ensure the U.S. can build critical energy infrastructure in an efficient and timely manner while maintaining safety and operational performance.
It’s critically important that there be regulatory certainty, which will help encourage potential European LNG buyers to sign long-term offtake agreements with U.S. LNG providers. At the same time, we need infrastructure construction in this country to ensure that domestic natural gas can reach demand centers more efficiently and at lower cost, reducing volatility. This will facilitate increased flows of U.S. natural gas to other markets, including LNG to the EU.
As for Europe, the European Commission needs to:
- Consistently express confidence in the medium- and long-term role of natural gas (including its decarbonized form) – as Miguel Arias Cañete did above.
- Remove barriers to cross-border trade and support development of liquid natural gas hubs within Europe.
- Eliminate regulated prices for natural gas. They distort market competition in the EU and negatively impact the wholesale market.
- Encourage public entities and businesses to use LNG and compressed natural gas in road and maritime transportation – to take advantage of natural gas’ benefit in reducing carbon dioxide emissions.
- Avoid setting unduly restrictive natural gas quality specifications that could create unnecessary barriers for LNG to enter the EU.
These are positive steps to help increase U.S. LNG trade with Europe, which will help important allies by creating natural gas supply options. More broadly, LNG exports help stimulate domestic production and support energy jobs here at home.
The U.S. is poised to grow its LNG exports. The U.S. Energy Information Administration reports that the U.S. has been a net exporter of natural gas for more than 12 consecutive months:
It’s evidence of the strength of domestic production and growth in exporting capacity. With the API-IOGP recommendations detailed here, Europe as a destination market can be well supplied.
About The Author
Mark Green joined API after a career in newspaper journalism, including 16 years as national editorial writer for The Oklahoman in the paper’s Washington bureau. Previously, Mark was a reporter, copy editor and sports editor at an assortment of newspapers. He earned his journalism degree from the University of Oklahoma and master’s in journalism and public affairs from American University. He and his wife Pamela have two grown children and four grandchildren.
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