HOUSTON — President Biden announced Friday that the United States would send more natural gas to Europe to help it break its dependence on Russian energy. But that plan will be largely symbolic, at least in the short term, because the United States doesn’t have enough capacity to export more gas and Europe doesn’t have the capacity to import significantly more.
But energy experts said it could take two to five years to build enough terminals on both sides of the Atlantic to significantly expand U.S. exports of liquefied natural gas, or LNG, to Europe. That reality is likely to limit the scope of the natural gas supply announcement Mr Biden and European Commission President Ursula von der Leyen announced Friday.
“In the short term, there really aren’t any good options other than begging an Asian buyer or two to give up their LNG tanker for Europe,” said Robert McNally, who was an energy adviser to former President George W. Bush. But he added that once enough gas terminals are built, the United States could become the “energy arsenal” helping Europe break its dependence on Russia.
Friday’s agreement, which calls on the United States to help the European Union secure an additional 15 billion cubic meters of liquefied natural gas this year, could also undermine the efforts of Mr Biden and European officials to fight climate change. Once new export and import terminals are built, they will likely continue to operate for decades to come, sustaining fossil fuel use for much longer than many environmentalists consider sustainable for the planet’s well-being.
For now, however, climate concerns appear to have faded as US and European leaders seek to punish Russia’s President Vladimir V. Putin for invading Ukraine by depriving him of billions of dollars in energy sales.
The United States has already significantly increased energy exports to Europe. So far this year, nearly three-quarters of USLNG has gone to Europe, up from 34 percent for all of 2021. As natural gas prices in Europe have risen, US companies are doing everything they can to send more gas there. The Biden administration has helped by getting buyers in Asian countries like Japan and South Korea to waive LNG shipments so they could be shipped to Europe.
The United States has a lot of natural gas, much of it in shale fields from Pennsylvania to the Southwest. Gas is bubbling out of the ground with oil from the Permian Basin, which spans Texas and New Mexico, and producers there are gradually increasing production of both oil and gas after sharply cutting production in the first year of the pandemic, when energy prices collapsed.
But the big problem with sending more energy to Europe is that, unlike crude oil, natural gas can’t be easily done on ocean-going vessels. The gas must first be cooled in an expensive process at export terminals, often on the Gulf Coast. The liquefied gas is then poured into specialized tankers. When the ships arrive at their destination, the process is reversed to convert LNG back into gas.
A large export or import terminal can cost more than $1 billion, and planning, obtaining permits and completing construction can take years. There are seven export terminals in the United States and 28 large-scale import terminals in Europe, which also source LNG from suppliers such as Qatar and Egypt.
Until recently, some European countries, including Germany, were not interested in building LNG terminals because it was much cheaper to import gas from Russia by pipeline. Germany is now reviving plans to build its first LNG import terminal on the north coast.
“Europe’s need for gas is much greater than what the system can supply,” said Nikos Tsafos, an energy analyst at the Center for Strategic and International Studies in Washington. “Diplomacy can only do so much.”
In the longer term, however, energy experts say the United States can do a lot to help Europe. Washington, together with the European Union, could provide loan guarantees for US export and European import terminals to reduce costs and accelerate construction. Governments could require international credit institutions such as the World Bank and the European Investment Bank to make natural gas terminals, pipelines and processing facilities a priority. And they could relax regulations that gas producers, pipeline builders and terminal developers claim have made it more difficult or expensive to build gas infrastructure.
Charif Souki, executive chairman of Tellurian, a US gas producer that plans to build an export terminal in Louisiana, said he hoped the Biden administration would streamline permits and environmental assessments “to make sure everything happens quickly without micromanaging everything.” .” He added that the government could encourage banks and investors, some of whom have recently avoided oil and gas projects in an effort to polish their climate credentials, to lend to projects like his.
“If all the major US banks and major institutions like BlackRock and Blackstone are comfortable investing in hydrocarbons, and they are not going to be criticized, we will develop $100 billion in infrastructure that we need,” said Mr. souki.
A handful of export terminals are under construction in the United States and could increase exports by about a third by 2026. About a dozen export terminal projects in the US have been approved by the Federal Energy Regulatory Commission, but cannot proceed until they have secured funding from investors and lenders.
“That’s the sticking point,” Mr. Tsafos said.
About 10 European import terminals are being built or are in preparation in Italy, Belgium, Poland, Germany, Cyprus and Greece, but most have not yet secured their financing.
Russia supplies about 40 percent of the gas in Europe and its largest customers are mostly in Eastern and Central Europe. Some countries have built up LNG import capacity, but much of it is in southern Europe, which is not well connected by pipeline to the countries to the north and east.
A month after the war in Ukraine, Russian gas shipments to Europe have remained relatively stable, but that could change. Mr Putin suggested on Wednesday that countries hostile to Russia should be required to pay for their energy in rubles rather than euros or dollars. That would force European companies to do business with Russian banks sanctioned by Western governments.
There are some signs that European companies and individuals could reduce their use of natural gas, partly because it has become so expensive. For example, Yara International, a major fertilizer manufacturer in Italy and France, has said it would cut production due to the high cost of raw materials such as natural gas.
While reducing demand would help, some climate scientists and activists are concerned that the Biden administration and the European Union’s focus on building LNG terminals could be a serious blow to efforts to tackle global warming. by encouraging the use of fossil fuels.
“There is a risk that you will be stuck with 20 or even 30 years of emissions from export infrastructure at a time when you really need to reduce your overall emissions,” said Clark Williams-Derry, senior fellow at the Institute for Energy Economics and Financial Analysis, a research organization.
Jason E. Bordoff, cofounder of Columbia University’s Climate School and former energy adviser to President Barack Obama, said the Biden administration could encourage the Biden to ship more gas to Europe while promoting cleaner alternatives such as wind and solar.
In the longer term, US government funding and diplomacy could help accelerate Europe’s clean energy transition to reduce reliance on unavoidably volatile hydrocarbons, he said.
Some proponents of natural gas exports say the fuel could help Europe meet climate goals by reducing the use of coal in power plants. Burning coal releases more greenhouse gases than burning gas.
Gina McCarthy, Biden’s senior climate change adviser, said on Thursday the government plans to balance what it called a “short-term stopgap” to help Europe tackle climate change.
“We cannot increase our dependence on fossil fuels,” Ms. McCarthy told a group of renewable energy executives. “We make clear distinctions, even in our talks with the European Union.”
Lisa Friedman contributed reporting from Washington.
