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Russian Gas Addiction Problem No Problem for Those Willing to Address It

DRBC fracking ban - Tom Shepstone ReportsTom Shepstone
Shepstone Management Company, Inc.

 

Russian gas addiction is a very real problem for Europe (and soon Boston?) but the solution is no mystery. It’s fracking here, LNG and development of UK gas.

CNN Money has a fascinating story about Russian gas addiction in Europe. It’s a problem that’s come to our shores as well with Russian LNG entering Boston this past winter. What’s most interesting about the CNN Money article is that it ignores the obvious root of the addiction problem and the obvious solution. The problem is failure to develop natural gas resources in Europe (and pipelines to Boston). The solution is a combination of more natural gas development here and in the UK, for instance, and LNG.

Russian gas addiction

Here are some excerpts from the article (emphasis added):

Try as it might, Europe just can’t dump Russia

The European Union imports 69% of its natural gas, according to the European Commission. The latest available data shows 37% of the imported gas comes from Russia, about 33% from Norway, and 11% from Algeria.

And while the European Union vowed to cut its dependency on Russian gas after the crisis in Ukraine, Russian exports to Europe have risen to record levels in the last two years

“There are many reasons for this, namely the decline of production in the Netherlands, the fact that some [liquified natural gas] developments have been delayed, and also the fact that Russian gas is very competitive in terms of price,” said James Henderson, director of the Natural Gas Research Programme at the Oxford Institute for Energy Studies…

A number of EU countries, particularly those closest to Russia, are still almost completely dependent on Moscow for their gas.

What’s more, much of Russia’s natural gas is pumped through Ukraine, a risky route given the conflict between the two countries.

Russia has in the past used Ukraine’s dependency on its energy as a way of exerting pressure on the country. Some European leaders are worried that Russia could adopt the same strategy towards the European Union in retaliation for sanctions…

Plans for a new gas pipeline that would bypass Ukraine have been in the works for years, but Europe is deeply divided over the project.

Opponents say the Nord Stream 2 pipeline would only increase the European Union’s dependence on Russian energy. But Germany and some other countries argue that it would give Europe more energy security…

Still, the European Union has taken some steps to wean itself off Russian gas. It has invested in liquefied natural gas import terminals in Poland and Lithuania, making it possible to use other suppliers.

American producers have been trying to export more natural gas to Europe, but they mostly haven’t been able to offer prices that can compete with Russia.

Europe has also built better pipeline links between nations, so it can send gas back and forth where needed, while keeping prices competitive.

However, Europe is likely to remain dependent on Russian gas for decades to come.

“Europe is a major energy importing region. There aren’t many options apart from reducing gas usage overall,” said Henderson.

There is one obvious omission from this article and that is the potential for Europe to develop its own gas. The UK is, finally, on the cusp of doing that in Lancashire and other places after years of dawdling. Our friend Nick Grealy, if he were still with us, would be screaming out details about the enormous potential of the UK’s Bowland Shale. It is, in a word, humongous. There are also still efforts to develop shale in Poland, for example. There is, based on UK shale potential alone, no reason for Europe to not address its Russian gas addiction.

Russian gas addiction

Perhaps even more importantly, though, there are shale resources in France, Germany and the Netherlands that could also be developed but these countries have opted for political correctness instead. Where is that discussion in this article about Russian gas addiction? It’s missing, of course, along with any analysis of the complete failure of Germany’s Energiewende, which has accomplished nothing but making the stubborn state more dependent on Russian gas, while raising both electric prices and greenhouse gas emissions.

Finally, it’s revealing that the fellow from the Oxford Institute for Energy Studies (the supposed “expert”) sees no option for addressing Russian gas addiction other than reducing gas usage. The UK is sitting on the solution and he doesn’t mention it? Or, is it that CNN Money simply didn’t ask that obvious question or give us his answer? Given the nature of his “not many options” comment, it seems he’s simply resigned to a Russian gas addiction, which is, of course, very European.

Meanwhile, here in the land of innovation and liberty, we have consistently lowered the cost of developing our shale gas resources. Contrary to Mr. Henderson’s pessimism about our ability to compete with Russian gas, we will do so, because that’s what we always do. Our costs will keep coming down and we will be shipping gas to Poland and Lithuania, if for no other reason than the fact these nations understand what it means to be under Russian domination.

Sadly, though, some parts of our nation think like Europeans and, in fact, have European envy, Boston and environs being the best example. They chose, this past winter, to import Russian LNG from icy Yamal. Why? Because they had previously chosen to not accept pipelines necessary to deliver American natural gas and ensure their own energy security. New York State is doing the same thing, of course. Indeed, the Empire State seems determined to enable a future Russian gas addiction on the part of its neighbors. It’s time for some real leadership here to address this issue and not let our future become that of Europe.

 

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5 thoughts on “Russian Gas Addiction Problem No Problem for Those Willing to Address It

  1. Mikhail Putin is a management committee member of the Russian state-owned gas giant Gazprom. How convenient for Vladimir. We have our own natural gas reserves under our feet right here in New York and Pennsylvania. Let’s create jobs here in America….and not help to prop up the Putin regime.

  2. GAZPROM has had an energy strangle hold on Europe for years. Alternate energy attempts have been made e.g. renewable [Germany] Coal [Poland] Nuclear [France]. Economics have worked against expansion of nuclear power and renewables increase cost of electricity. New coal-fired power plants may be economical but not is Carbon Capture and Sequestration is required. USA shale gas, in the form of LNG, offers to most likely competitive energy source to Russia’s Natural Gas pricing. Another possible source of cost competitive LNG could be Israel i.e. Leviathan, Tamar etc.

  3. Europe uses Russian gas for the same reasons I don’t make my own tomato sauce. The stuff in the store is just fine, priced right and saves me the effort of gardening in the hot sun. Of course Russian and the grocery store have similar selfish motives of keeping us dependent on them. I do have the land and time to be independent, but I choose to be interdependent.

    Nor can the U.S. supply gas to Europe in a quantity even remotely close to what the Russians can unless they want to build a huge fleet of LNG tankers, which would cost many billions of dollars and takes years to construct.

    Finally Trump’s incompetent diplomacy has alienated our allies. His antagonistic attitude toward treaty agreements like NATO, NAFTA and TPP and longtime partners like the U.K., France and Germany have created a distrust of U.S. actions. What part of creating a market depends on trust does he not understand.

    Reuters reported in May of this year that the German Economy Minister, Peter Altmaier said:
    “The U.S. are our friends and partners, and we want to defend our common values. But if it’s America first, and they put their economic interest before others, then they have to expect Europe to define their own interests and fight for them.”

    reuters.com/article/russia-germany/if-its-america-first-then-europe-will-respond-in-kind-altmaier-says-idUSS8N1PX03S

    • I would rather get sunburned by growing tomatoes on my own land and not willfully choosing to be dependent on an adversary dedicated to my destruction.

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