WASHINGTON — European leaders on Tuesday pleaded for the United States to allow more of its natural gas to be sold overseas, transforming the fossil fuel into a geopolitical weapon against Russia and a tool for strengthening allies abroad.
Lithuania’s energy minister, Jaroslav Neverovic, told the Senate Energy and Natural Resources Committee that the promise of more American natural gas on the world market would help free Russia’s yoke on the Baltic country. Lithuania, which is entirely dependent on Russia for its natural gas, pays 30 percent more than other European nations for the fossil fuel.
“I am here to plead with you to do everything within your power to help us . . . by expediting the release of some of your abundant natural gas resources into the world market, especially to those nations beholden to a monopolistic supplier,” Neverovic said.
Ukraine crisis: Natural gas export proponents push the Ukraine card
The appeal was duplicated on the other side of Capitol Hill, as Hungary’s foreign affairs minister, Anita Orban, told a House Energy and Commerce subcommittee that more U.S. natural gas export approvals would be an “elegant” way to combat Russia’s influence overseas.
Expediting gas exports
Three congressional committees tackled the issue Tuesday, and another House hearing is planned Wednesday — spurred by Russia’s annexation of Crimea and fears it could cut off the flow of gas to Ukraine. Russia also supplies about 30 percent of Europe’s gas needs.
The Energy Department has approved seven licenses for six projects to broadly export natural gas to countries that are not free-trade partners with the United States. But roughly two dozen more applications are awaiting Energy Department decisions.
House and Senate bills aim to speed up the permitting process through a variety of means, including granting immediate licenses to all applications in the Energy Department’s queue. Others would extend near-automatic approvals beyond exports to U.S. free-trade partners so that members of the World Trade Organization and North Atlantic Treaty Organization could also qualify for the expedited review.
Critics stressed that the export decisions would have decades-long impacts on U.S. natural gas prices, potentially thwarting an American manufacturing renaissance stoked by low-cost power and chemical feedstocks.
No silver bullet
Sen. Debbie Stabenow, D-Mich., argued Tuesday that the Ukraine crisis should not be used to short-circuit the export review process. Instead, she said, the U.S. should maintain “a thoughtful, balanced approach” to exports that protects U.S. manufacturing and domestic natural gas consumers.
Opponents also argue that big hurdles to exporting American natural gas extend well beyond the federal permitting stage to financing and building the multibillion-dollar terminals capable of exporting the fossil fuel. It would take years to build the terminals, and the supplies likely would flow not to European countries but Asian markets willing to pay more for the fossil fuel. Even if some of the gas made it to Europe, the continent is ill-equipped to take advantage of it right now. While there are 22 operating natural gas import facilities in the European Union now, and another six terminals under construction, pipelines there are poorly integrated, stranding supplies in the Iberian peninsula.
Sen. Mary Landrieu, D-La., the head of the energy panel, acknowledged that immediate export approvals were no “silver bullet.”
Energy experts argued that swifter export approvals would have immediate impacts overseas, as European buyers factor the availability of gas sold at U.S. benchmark Henry Hub prices into contracts for natural gas deliveries years in the future.
“A clear signal from the U.S. that LNG exports would be available for European allies for future purchase would put immediate pressure on Russia’s market share and would help accelerate investment in and construction of gas transportation infrastructure,” said David Goldwyn, a senior fellow with the Brookings Institution. “The more Henry Hub gas that hits the market, the greater the bargaining power of gas buyers.”
Adam Sieminski, head of the government’s Energy Information Administration, said some companies already have had better luck negotiating with large gas suppliers and getting better contract terms with just one new U.S. natural gas export terminal under construction.
Electoral politics spilled into the debate, as Sen. Mark Udall, D-Colo., and his likely Republican challenger, Rep. Cory Gardner, R-Colo., jockeyed to be viewed as the bigger gas exports champion. Both lawmakers have introduced measures to ease export approvals for WTO nations, with the House energy subcommittee focusing on Gardner’s legislation Tuesday.
Udall had been looking to attach his export measure as an amendment to a $1 billion Ukraine aid package on the Senate floor this week. But he declined to answer reporters’ questions about the proposal’s fate after a Democratic strategy session Tuesday.
Separately, the House Foreign Affairs committee voted to adopt a proposal from Rep. Ted Poe, R-Texas, that would force the State Department to study the geopolitical effects of U.S. energy exports. The panel added Poe’s plan to a separate Ukraine bill by voice vote Tuesday.