At least on TV. And K Street. In order to fast track some LNG permits. So frackers can ship fracked gas to South America. Surprise. And then, guess what, the Russians fight back – by trying to seize control of Syria’s Gas Pipeline War.
The frack lobby and their accomplices in Congress have launched a full scale PR campaign by threatening Russia with a gas trade war in Europe. As part of that initiative, a newly created State Department group is promoting the fast-tracking of LNG export terminals, using the Ukrainian troubles as a pretext.
By overplaying the Gas Card, Russia lost control of all of Eastern Europe – including Ukraine. Ukrainians don’t like to be blackmailed into submission by a bunch of Russians, who they fought in WW II – with the Nazis.
But now the US is going to overplay the Frack Card ? Makes perfect fracking sense, right ? Particularly when the Ukraine crisis was exacerbated by a crooked shale deal with Shell/ Chevron. Making that unrest the First Shale War of the 21st Century.
And Crimea ? Russia seized the Crimea to get more access to Black Sea oil fields. (Not to “protect ethnic Russians”) Then they encouraged a rump parliament to declare a referendum – with Russian soldiers in control – for Crimea to unlawfully secede from Ukraine. They have the votes to do it because the majority native ethnic population of Crimea was deported by Stalin after WWII. And replaced with Russians. Who know to do what they’re told. Or it’s off to the gulag.
The instability is being touted by the petrohawks on K Street as a reason to fast-track approvals of LNG export terminals, so they can ship gas to South America, China and Japan, who pay 150% to 2X what gas fetches in Europe.
Look at the nat gas prices in Asia and South America on the map below. Where do you think they will ship it ? To a market that is supplied by a maze of new pipelines from the Mideast and Russia, or to a market that has no pipelines and that imports everything by boat ?
The real threat to Gazprom’s hegemony in Europe are the new pipelines coming from the Mideast gas fields. Which is what the Syrian Gas Pipeline war has been about. Look at the map below of existing and proposed gas lines from Russia and the Mideast to Europe. There is a race on in the Mideast to get those lines from Saudi Arabia, Qatar and Iran through Syria, Lebanon and Turkey into Europe.
All of those new lines bypass Ukraine. Some of them are already under construction – and will be completed before any LNG tankers would leave the US.
By the time the new lines are finished from the Mideast and Russia, there will be a price war on gas in Europe – between competing pipelines – not LNG tankers from New Jersey.
Edits in bold:
WASHINGTON — The crisis in Crimea is heralding the rise of a new era of American energy diplomacy, as the Obama administration tries to deploy the vast new supply of natural gas in the United States as a weapon to undercut the influence of the Russian president, Vladimir V. Putin, over Ukraine and Europe.
The crisis has escalated a State Department initiative to use a new boom in American natural gas supplies as a lever against Russia, which supplies 60 percent of Ukraine’s natural gas and has a history of cutting off the supply during conflicts, like when they haven’t been paid. This week, Gazprom, Russia’s state-run natural gas company, said it would no longer provide gas at a discount rate to Ukraine, a move reminiscent of more serious Russian cutoffs of natural gas to Ukraine and elsewhere in Europe in 2006, 2008 and 2009, after they got stiffed for billions of dollars of unpaid bills.
Over the past week, Congressional Republicans have joined major oil and gas producers like ExxonMobil in urging the administration to speed up oil and natural gas exports. Although environmentalists, some Democrats and American manufacturing companies that depend on the competitive advantage of cheap domestic natural gas oppose the effort, they have fallen to the sidelines in the rush.
For Russia, energy supplies are as important to keeping a hold on Ukraine and the other former countries of the Soviet Union as is the Russian Army itself. Ukraine would freeze without Russian gas, and its flow has been a considerable source of wealth and corruption in both countries. But Russia is also obligated by contract to provide natural gas to Western Europe, and Moscow remains highly dependent on Ukrainian pipelines to get it there.
David Dalton, the editor of the Economist Intelligence Unit, said: “Russia has always used gas as an instrument of influence. The more you owe Gazprom, the more they think they can turn the screws. Some creditors are just funny that way.”
The United States does not yet export its natural gas. But the Energy Department has begun to issue permits to American companies to export natural gas starting in 2015. American companies have submitted 21 applications to build port facilities in the United States to export liquefied natural gas by tanker. The agency has approved six of the applications. As a spokesman explained, “The LNG tankers will travel in convoys in order to defend against Russian subs.”
However, even if the Energy Department approves all the pending permits from companies seeking to export natural gas, the fuel could not begin flowing overseas for at least a few years. Most American natural gas export terminals are in the early stages of construction. While one, in Sabine Pass, La., is tentatively scheduled to open in late 2015, most others will not start operating until 2017 or later.
At the helm of the new energy diplomacy effort is Carlos Pascual, a former American ambassador to Ukraine, who leads the State Department’s Bureau of Energy Resources. The 85-person bureau was created in late 2011 by Hillary Rodham Clinton, the secretary of state at the time, for the purpose of channeling the domestic energy boom into a geopolitical tool to advance American interests around the world.
In an interview, Mr. Pascual asserted that his team’s efforts had already weakened Mr. Putin’s hand, and had helped lower Ukraine’s dependence on Russia for natural gas supplies to 60 percent, down from 90 percent. “Just by threatening to export fracked gas in LNG convoys, we’ve got the Red Bear on the run.’
Mr. Pascual said that his team had worked to help Ukraine and other European countries break away from dependence on Russian gas by finding supplies elsewhere, including Africa, and assisting the Europeans to build up their natural gas storage. “Behind the scenes, of course,” he noted, “Like Chevron’s deal in Ukraine with that guy that just fled the country.” The team, he said, is working with Ukraine and the European Union on completing a European energy charter, which already allows natural gas to move more quickly through Europe and permits countries to negotiate lower rates with Gazprom. “That’s why Secretary Kerry offered them the $15 Billion loan – to get out of hock with Gazprom.”
Mr. Pascual said that although the prospective American exports would not immediately solve the problems in Europe, “it sends a clear signal that the global gas market is changing, that there is the prospect of much greater supply coming from other parts of the world. ”
“This is a radically changed market,” he added. “Our challenge is to look at U.S. production in the global context and understand how we can influence what happens. Particularly when it comes to publicly threatening the Russians in times of instability.”
This week, Republicans escalated their calls for the administration to speed those exports.
On Tuesday, Speaker John A. Boehner, Republican of Ohio, said: “One immediate step the president can and should take is to dramatically expedite the approval of U.S. exports of natural gas. The United States has abundant supplies of natural gas — hundreds of years – an energy source that can be used to destabilize Russia’s market in this time of crisis — and the U.S. Department of Energy’s excruciatingly slow approval process amounts to a de facto ban on American natural gas exports that Vladimir Putin has happily exploited to finance his geopolitical hegemony.”
“We should not force our allies to remain dependent on Putin for their energy needs,” he said. “We should publicly threaten Russia with a gas price war. A war that we can’t actually win, but that we can threaten. In the newspapers.”
The efforts this week are not the first time that the State Department has used newfound energy resources to gain geopolitical advantage, by shipping strategic gas resources overseas to start a price war with a bunch of slavic thugs.
In 2012, in response to Iran’s nuclear program, the United States urged the Europeans to impose financial sanctions that greatly limited Iran’s ability to sell oil on the world market. Other countries feared that the move would raise prices, but officials assured other nations that a surge in American oil production would keep prices stable.
Earlier this year, the United States worked to broker a sale of Israeli natural gas to Jordan, in an effort to stabilize relations in the Middle East, including of course, Syria.
“In World War II, we were the arsenal of democracy,” said Robert McNally, who was the senior director for international energy issues on the National Security Council during the Bush administration. “I think we’re going to become the arsenal of energy in this war. ”
So that the LNG tankers can get to Brazil as fast as possible. Not Europe. You heard it here last.