Natural Gas ‘Comeback’ in Europe Puts U.S. LNG on Center Stage
Posted July 26, 2022
Energy has always had transitions, as the world moved from one primary source to another and hardly looked back. Natural gas’ recent trajectory is an interesting departure from the pattern.
Ascendant during America’s shale revolution, then less favored as the climate debate intensified, natural gas is rising again thanks to a stiff dose of reality in Europe.
Even before Russia invaded Ukraine, Europe was struggling on the energy front due to an unusual lack of wind from the normally blustery North Sea, used to generate electricity. Then, when Russia attacked Ukraine there was a new challenge – the possibility Russia, which supplied 40% of Europe’s natural gas, might weaponize that energy.
And that may be happening. Gazprom, the Russian majority state-owned multinational energy corporation, appears to be applying pressure to Europe with curtailed natural gas flows on the Nord Stream pipeline, prompting alarm from Germany’s foreign minister. Earlier this week, Germany’s second-largest landlord said it wants the government to expedite legislation to allow it to reduce heating supply to tenants this winter. Meanwhile, French President Emmanuel Macron recently cautioned that his country must cut its energy use or face a difficult winter – this year, and perhaps beyond. European Commission President Ursula von der Leyen summed it up last week:
“Russia is blackmailing us. Russia is using energy as a weapon, and therefore, in any event, whether it’s a partial, major cut-off of Russian gas or a total cut-off of Russian gas, Europe needs to be ready.”
Clearly, energy security concerns – and, specifically, the importance of secure natural gas supplies – are back. Dan Yergin, vice chairman of S&P Global, writing recently in the Wall Street Journal:
The amnesia about energy security is over. The global energy crisis fueling record high inflation is shaking governments as consumers are stunned and angry at high prices and the prospect of shortages. …
Enter liquefied natural gas (LNG) from America, which became the world’s largest LNG exporter in the first half of 2022, according to the U.S. Energy Information Administration.
U.S. LNG shipments have soared with Russia’s aggression. We learned recently that for the month of June – and the first time in history – the U.S. supplied more natural gas to Europe than Russia sends by pipeline. This would have been unthinkable a few years ago and highlights America’s unique ability to step up to meet the moment in Europe, when help is needed most. As France’s Macron said, winter is coming.
Looking more broadly, the U.S. probably will be the only significant source of new LNG for the next couple of years, so there’s opportunity to continue helping allies. Bottom line: The world is going to need more natural gas in the future, not less.
For the U.S. to lead on energy globally, while also supplying domestic needs, more American natural gas must be produced – especially given Washington’s agreement with the European Union to provide more American LNG to allies there. That means more access to reserves and more investment. It also means more infrastructure, regulatory and permitting revisions, as well as accelerated approvals of LNG export projects.
All of these and more are addressed in API’s “10 in 2022” Plan of actions the Biden administration and/or Congress can take immediately to support U.S. energy leadership. API President and CEO Mike Sommers, in a letter to President Biden inviting consideration of the “10 in 2022” plan:
As Americans face soaring energy costs and the world braces for the potential for future supply shortages, this crisis again calls for American leadership. Fortunately, the United States benefits from an abundance of oil and natural gas resources and has developed cutting-edge technologies to be the world’s energy leader. It is vital for the United States to take action to preserve our leadership position, promote economic growth, and support the American people and help defend our allies.
To overcome the obstacles we are facing, it is time for an energy awakening – for the oil and natural gas industry and government to come together to unlock America’s energy resources, encourage investment opportunities, accelerate infrastructure, and strengthen global energy security.
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 six grandchildren.