European imports of LNG from US suppliers face weighty constraints, witnesses told the US Senate’s Energy and Natural Resources Committee. “Most [European Union] members in central and southeastern Europe do not have LNG regasification terminals and can rarely access LNG supplies through the EU’s collective natural gas distribution network,” US Assistant Sec. for Fossil Energy Steven E. Winberg testified at a Sept. 14 hearing.
“Specifically, the ability for US LNG to compete with other pipeline gas alternatives in the EU has been slowed by two factors: pipeline permitting and resistance to investment and buildout of critical infrastructure from regasification facilities. Storage capacity in the EU is also lacking,” Winberg said in his written testimony.
The US Department of Energy is working with the EU and member countries to identify transportation and storage issues, and to identify projects that could address issues now impeding European energy supply diversification and security, Winberg said.
Other witnesses, as well as the committee’s leaders, warned that the US should be concerned about the security implications of Europe’s heavy dependence on Russian gas.
“In the past and today, Russia and its national gas company, Gazprom, has used gas exports as a tool of political influence, intimidation, coercion, and even as a weapon by threatening and enacting supply cuts and price increases,” said Agnia Grigas, an associate at the Argonne National Laboratory and an Atlantic Council nonresident senior fellow.
Europe now is the world’s biggest gas importer, consuming close to 15% of the world’s gas but holding only 2% of its reserves, Committee Chair Lisa Murkowski (R-Alas.) said in her opening statement. “And Europe’s reliance on gas is increasing as its coal-fired power plants are phased out and nuclear plants are placed out of service,” Murkowski noted.
US could change equation
Noting that Russia used its position as Europe’s main outside gas supplier to cut off supplies to Ukraine in 2006 and 2009, and therefore halt deliveries to Europe, Murkowski said, “But with the abundance of our domestic natural gas supplies, the United States is poised to change that equation.” The US Energy Information Administration forecasts that US gas exports to Europe will climb almost 20% by 2040, she said.
But the committee’s ranking minority member, Sen. Maria E. Cantwell (D-Wash.), said while it’s important for the US to examine ways it can help its allies, it’s also essential not to forget domestic consumers. “The growth in US gas production has driven down prices and provided a key US competitive advantage for manufacturers which use gas as an energy source and feedstock. As domestic gas production increased, the US also became a net LNG exporter for the first time in 25 years in 2017,” she said.
Countries in Europe have accounted for the third-largest share of US LNG exports, and several more projects are expected to be completed in the coming years,” Cantwell said. “Once more projects are built, the US LNG export capacity is expected to reach 9.6 bcfd by 2019. However, while Europe has a large number of import facilities, they are only operating at 20-30% of capacity. The International Energy Agency predicts that US suppliers will reach a share of only about 10% of Europe’s market by 2025.”
Another committee member, Sen. John A. Barrasso (R-Wyo.), said it’s in the US national security interest to help European allies reduce their dependence on Russian gas. “If America does not step up to the plate now, then Russian influence is only going to grow,” he warned.
Barrasso said S. 3229, the Energy Security Cooperation with Allied Partners in Europe (ESCAPE) Act, which he introduced with three GOP cosponsors on July 18, would require the US Department of State, US Agency for International Development, and DOE to create a trans-Atlantic strategy focused on increasing the energy security of US North Atlantic Treaty Organization allies and increase US energy exports to them.
