WASHINGTON — A plan to accelerate U.S. natural gas exports in response to Russia’s invasion of Crimea failed in the Senate on Wednesday, amid criticism that it could derail a Ukraine aid package.
But Sen. John Barrasso, R-Wyo., vowed he would keep fighting for his proposal to ease restrictions on exporting natural gas to members of the North Atlantic Treaty Organization, during Senate debate on the broad Ukraine assistance package.
Senate Foreign Relations Committee Chairman Robert Menendez, D-N.J., tabled Barrasso’s proposal Wednesday and prevented a vote on the natural gas amendment to the Ukraine bill because, he said, it fell under the jurisdiction of at least one other panel.
“By not voting, we’re rewarding Russia with more power,” Barrasso said. “The message we’re sending right now is that we’re more willing to protect Russia’s energy monopoly.”
Barrasso and other natural gas export advocates have called on the Energy Department to speed up its review of roughly two dozen pending applications to sell the fossil fuel to countries that do not have free-trade agreements with the United States. The Ukraine crisis has emboldened some of those export advocates, who say the U.S. should aggressively be using its natural gas bounty as a strategic asset to help allies around the globe.
Emergency stockpiles: Administration denies link between Ukraine and tapping crude reserve
Some oil and gas industry representatives, however, are wary of tethering arguments for overseas energy sales to a potentially short-lived crisis.
The case for broader trade policy changes should stand on its merits, even independent of the Russian standoff, they say.
“I’m not sure it’s necessary to tether it to any one particular crisis,” said Erik Milito, upstream director of the American Petroleum Institute. “Over the long term, we need to show that we as a country are committed to being part of the global energy market so we can have the influence in the long term.”
Russian gas supplier Gazprom is ending discounts on supplies to Ukraine and has threatened to cut off shipments altogether.
While that may illustrate the potential power of U.S. exports, it does not undermine broader arguments for greater foreign sales of America’s natural gas, Milito said.
“If this is resolved in three or four weeks, what next?” he questioned. “The ‘what next’ is the same thing we’ve been talking about for the past couple of years: Let’s get moving on this so we can have this influence, if there is another crisis.”
U.S. law generally allows natural gas exports to countries that have free-trade agreements with America, but the scrutiny is higher for non-free-trade partners. In those cases, the Energy Department must authorize natural gas exports unless it determines they are not “consistent with the public interest.”
The Energy Department has approved six such licenses for natural gas exports to non-free-trade partners, but critics say they are moving too slow, potentially jeopardizing the ability of U.S. companies to compete with Canadian and Australian projects also aiming to supply Asian markets.
Sen. Barbara Boxer, D-Calif., said a huge increase in natural gas exports could cause big spikes in U.S. electricity prices. “I want to help Ukraine,” she said. “I don’t want to hurt the American people.”
Sen. Dick Durbin, D-Ill., acknowledged there is very real “extortion by Vladimir Putin and the Russians” through the oil and gas it supplies European and Western Bloc nations. “He has played that card every chance he gets to put pressure on them,” Durbin said.
But, Durbin said, he was concerned that boosting exports could jeopardize “a mini resurgence of manufacturing jobs in America” tied to relatively low domestic prices. “How many jobs will we lose in the manufacturing sector if the price of natural gas goes up as a result of this decision?” he questioned.
Durbin’s concerns echo those of the Dow Chemical Co. and other large industrial users of natural gas who have urged the Energy Department to pause new approvals in light of the cost concerns.
Some environmentalists also warn that approving 20-year export licenses could mean locking in fossil fuels and the drilling that is generating them.
Sen. Tom Udall, D-N.M., suggested that the entire Energy Department review process needed a shakeup because it was moving too slowly. But, he insisted, the Ukraine aid package was not the way to do it.
Obama administration officials note that U.S. regulators don’t dictate the locations of natural gas exports, which are, instead, decided by the private, commercial transactions underpinning the multi-billion-dollar deals.
It also would take years to construct domestic facilities capable of liquefying natural gas. The one fully approved export project under construction now in Louisiana isn’t expected to go online until late next year.