As the Biden administration attempts to boost U.S. liquefied natural gas exports to Europe amid the Russia-Ukraine war, oil and gas officials in Louisiana repeated a refrain on Friday Familiar: Don’t expect the state’s export total to explode anytime soon. soon.
Long construction delays, stretched capacities, regulatory pressures and opposition from conservationists could all prevent a near-term gain for Louisiana.
President Joe Biden and European Commission President Ursula von der Leyen on Friday announced a joint effort to reduce Europe’s dependence on Russian fossil fuels. The measures are designed to weaken the Russian economy as punishment for bombing Ukraine.
After being reluctant to sanction Russian oil and natural gas due to rising gas prices and limited oil supplies, Biden has gradually targeted them in recent weeks. Earlier this month, Biden announced that the United States would no longer import oil from Russia.
The White House said Friday that the United States will “work with international partners” to increase LNG supply to the European market by at least 15 billion cubic meters in 2022 with an eye on 50 billion cubic meters of by 2030. The United States and Europe also intend to reduce the greenhouse gas intensity of any new LNG infrastructure by reducing methane leakage, improving Europe’s ability to manage safe imports and finding clean energy sources to power LNG facilities and reduce global natural gas use.
U.S. Representative Garret Graves, R-Baton Rouge, called Biden’s LNG move — as well as the Department of Energy’s decision to approve increased capacity at two LNG facilities, including Sabine Pass in the Cameron Parish – “another step in the right direction”. However, he said the Department of Energy needed to do more.
“Until they clear pending export terminal permits and allow construction of new LNG facilities, our ability to replace dirtier Russian gas is limited,” Graves said in a statement. “It’s good to see that the pressure on the Biden administration is working, but the only real long-term solution moving forward is to allow the construction of a new LNG terminal and to use the production of national energy so that we can provide our allies with reliable and secure energy.”
The totals offered by the White House and the European Commission are nowhere near enough to dent the global supply of LNG, said David Dismukes, executive director of LSU’s Center for Energy Studies. He noted that a standard tanker can transport 3 billion cubic meters of LNG in a day.
Dismukes added that most European natural gas buyers would rather sign long-term contracts – a norm in the LNG industry – than make spot purchases here and there.
“While that might sound great, there’s this backdrop of all these anchors around the neck of the industry that also need to be pulled out to get more drill bits in the ground,” Dismukes said.
‘100% maximum capacity’
Of the six U.S. LNG export terminals, Sabine Pass in Cameron Parish easily had the largest export production in 2021 at over 1.24 trillion cubic feet, more than a third of all exports, according to data from the US Energy Information Administration. Cameron LNG, located in Hackberry, was fourth with more than 602 billion cubic feet.
Mike Moncla, president of the Louisiana Oil and Gas Association, said Louisiana’s LNG terminals are currently at “100% maximum capacity.”
Any effort to direct more existing LNG to Europe would deprive Asian markets of supply, Moncla said. About 70% of US LNG is shipped to Europe, 20% to Asia and 10% to other countries.
Moncla said the key is getting federal approval on permits for new terminals waiting in the wings.
“We can increase (supply) as factories come in, but it takes a while for those factories to be licensed, approved,” Moncla said.
To be clear, more terminals are on the way. Venture Global plans to build four in Louisiana, Tellurian Inc. will build Driftwood LNG in Calcasieu Parish, and Dallas-based Energy Transfer LP plans to convert its Lake Charles LNG import facility to an export facility. Commonwealth LNG is also planning a Cameron Parish terminal.
But it will be years before the terminals are built, and that’s assuming all goes well.
“It all sounds great, but you’ll need to complete some capacity and make final investment decisions,” Dismukes said.
Change on climate change?
Biden’s recent policy decisions mark something of a reversal of his climate change plans amid a global energy crisis as countries turn away from Russia’s oil and gas bounties.
Shortly after taking office, Biden signed an executive order ending oil and gas leases on federal lands and waters. This fight continues to drag on in the courts.
On Thursday, the Federal Energy Regulatory Commission also scaled back its plans to account for the effect of natural gas projects on the Earth’s climate.
Environmental groups have pushed back on the move towards more LNG, saying it’s not as green as industry advocates make it out to be.
Officials from Earthjustice, an environmental law nonprofit, said the United States and Europe cannot ramp up LNG activity without sacrificing their climate commitments.
“It will take years and billions to build new LNG infrastructure that will lock in costly fossil fuel addiction and dangerous pollution for decades to come,” Earthjustice President Abigail Dillen said in a statement. “Investing in new LNG is not a short-term solution to get rid of Russian gas in Europe.”
The fight for LNG is ongoing in Louisiana, particularly for Commonwealth LNG’s proposed facility at Cameron Parish. Residents and environmental activists spent two hours at a recent Louisiana Department of Environmental Quality hearing debating the merits of the Commonwealth Air Permit.
“We need to act quickly to reduce greenhouse gas emissions, and we need to stop this false narrative that there is anything clean about this gas,” James Hiatt, South West coordinator of Louisiana for the Louisiana Bucket Brigade and a longtime resident of southwest Louisiana, DEQ told the hearing.
Moncla, the chairman of LOGA, noted that the long approval process for LNG facilities usually involves some opposition.
“I know the environmentalists don’t even want Cameron another one,” Moncla said. “It’s always a fight.”