US Vice-President Joe Biden raised a large question during his Aug. 24 speech in Latvia urging Europeans to buy LNG from the US instead of pipeline gas from Russia: As the second-ranking official of an administration phobic about fossil energy, can he really mean it?
Hailing the start of US exports of LNG to Europe and leaving no room for confusion about the target of his message, Biden said, "Europe needs diverse sources of gas-not new pipelines that lock in greater reliance on Russia."
Nord Stream 2
Biden referred to the proposed Nord Stream 2 project-twin 48-in. pipelines to carry gas from giant Bovanenkovo field in northern Russia 750 miles across the Baltic Sea to Europe. The system's 5.3 bcfd of capacity would match that of the existing Nord Stream system, which began transporting gas in November 2011.
"Russian gas can and should be part of the European market, but that market needs to be open and competitive," Biden said. "So we're eager to continue working with our partners to help the region secure the energy future you deserve."
The vice-president's remarks came a little more than a year after an appeal in Washington, DC, by the Lithuanian ambassador for US officials to accelerate development of LNG exports. "We need LNG from America now," said the official, Zygimantas Pavilionis. "We can't wait another 10 years."
For Baltic-state officials in attendance, therefore, Biden's enthusiasm for American LNG had to be heart-warming. For Europeans, meanwhile, official support for a major new gas supply had to be comforting. And for Russian officials who might have been paying attention, the poke at Nord Stream 2 had to be irritating.
American gas producers and LNG developers naturally welcomed Biden's trumpeting of their industry. But they have reason to think it somewhat hollow. While Biden was in Riga marketing US gas, the administration he serves stayed busy adding to the many difficulties of supply development.
In Riga, Biden hailed North America's "abundance of gas," which has allowed the US to move "from anticipating massive imports of [LNG] to becoming the world's fastest-growing exporter." Yet production of natural gas from federal land has fallen each year since 2007, largely because the administration has slowed oil and gas leasing and permitting and raised or considered raising royalty rates and fees. And federal permitting of LNG projects remains slow. This isn't behavior consistent with a desire to boost sales of US gas in Europe or anywhere else.
The administration also is toughening its regulation of emissions of methane and other gases from oil and gas wells. Methane, in fact, has become a new obsession because its potency as a greenhouse gas is 25 times that of carbon dioxide, even though its combustion yields less CO2 than that of other hydrocarbon fuels and its concentration in the atmosphere is trivial. Tougher emission regulation will raise costs of producing gas at a time of depressed prices. The administration would achieve the same effect if it succeeded in its persistent efforts to raise industry taxation.
Federal regulation of the well-completion technique crucial to new gas supply, hydraulic fracturing, remains a concern for producers. The Bureau of Land Management and Environmental Protection Agency have considered it. BLM's plan is under litigation, and the EPA has concluded that the completion technique poses no widespread to water supply. But EPA's Scientific Advisory Board recently challenged the finding, essentially on the basis that the agency didn't measure what it couldn't find.
Legal challenge
The White House Council on Environmental Quality, meanwhile, has recommended expansion of National Environmental Protection Act reviews to consider climate change. Doing so might breach statutory authority. It certainly would increase the vulnerability of projects involving hydrocarbons to legal challenge from environmental activists.
Development of gas supply faces more resistance from Washington, DC, than it should, especially if Washington is serious about helping US gas compete in Europe. Nord Stream 2 doesn't have these problems.
