Europe pounces on American gas

Fred Hutchison meets many European government officials these days. The American runs LNG Allies, a lobbying organization that defends the interests of LNG (liquefied natural gas) companies, natural gas chilled to -161°C to be turned into liquid form and more easily transported by LNG tanker.

→ ANALYSIS. In view of Russia’s “gas blackmail” the Europeans are accelerating the discussions

At the beginning of April, he received a delegation of emissaries from a dozen countries on the Old Continent: Estonia, France, Bulgaria… He gave them an appointment in Houston, America’s energy capital, to meet with the major producers of shale gas, a natural gas that occurs in large quantities in the country’s rock formations and whose estimated production reached 223 million cubic meters per day across the Atlantic in 2021. On the program: Discuss “short-term solutions” to replace Russian energy with American sources.

“The activity has again focused on Europe”

Prior to this, the delegation visited the liquefaction and export terminal at Sabine Pass (Texas) on the Gulf of Mexico coast, from where the majority of the LNG tankers transporting LNG to the rest of the world depart. We want to live up to the moment explains Fred Hutchison. This is a time of great prospects for America’s energy sector. Since the economic recovery last year, we have seen a lot of interest in our natural gas from Chinese buyers. With the war in Ukraine, activities refocused on Europe. »

READ. War in Ukraine: Dependent on Russian gas, the European Union is looking for new suppliers

In April, the share of the old continent in American LNG exports reached 65%: For the fourth month in a row, Europe dominated the ranking of import regions ahead of Asia and Latin America. American LNG tankers bound for Japan or South Korea had to be diverted to Europe to meet rising demand.

“Improving the Strategic Position of the United States”

Joe Biden is keen to support this movement. At the end of March, the American President promised to work with the President of the European Commission “international partners” increase LNG deliveries by at least 15 billion cubic meters by the end of the year. For its part, the European Commission will work with Member States to ensure demand of around 50 billion cubic meters of American LNG per year at least until 2030.

Following Russia’s recent decision to suspend energy supplies to Bulgaria and Poland, the US Department of Energy has approved two liquefaction plants under construction in Texas and Louisiana for export to European countries. This decision was welcomed by the business community, which is evaluating the geopolitical and economic opportunities presented by this reorientation towards Europe.

→ ANALYSIS. War in Ukraine: Poland and Bulgaria will be deprived of Russian gas, what will be the consequences for the two countries?

Putin was against American shale gas, recently, Daniel Yergin, an energy historian, recalled in the columns of the Wall Street Journala pro-business daily newspaper. First, it competes with Russian power. Second, it improves the strategic position of the United States on a global scale. »

years of work

The United States, catapulted to become the top LNG exporting nation in 2022, has the means to live up to its ambitions. Their export capacity is estimated at 100 million tons, to which must be added more than 186 million tons “sleep potential”, said Nikos Tsafos, an expert on geopolitics of energy at the think tank Center for Strategic and International Studies (CSIS). This potential is equivalent to the volume that could be handled by around 10 gas processing and export facilities and terminal projects that have received the green light from the US government but are awaiting construction on long-term contracts.

→ ANALYSIS. USA: Driven by the war in Ukraine, shale oil and gas production at the highest level

“On the one hand, Europeans are reassessing their energy dependency on Moscow. On the other hand, some projects in the United States need investment.” sums up Nikos Tsafos. “It’s a no-brainer: Europe should pour money into US export capacity to get away from Russia. » Especially since a hundred LNG locations are already running at full speed across the Atlantic.

However, the commissioning of new terminals can take years. In the best case at least three believes Fred Hutchison. You can’t just build these facilities anywhere. You have to sit on rocks. And we also need to build gas pipelines. Just preparing the website can take years! The hurdle of financing is also important. With each project costing billions of dollars, market participants cannot turn to just one bank. They have to borrow from syndicates. » US export capacity won’t increase, lobbyist says “in a meaningful way” before 2025.

Climatic requirements must be taken into account

On the European side, the importing countries in particular must equip themselves with systems to heat the transported gas and return it to its natural form. From a travel perspective, Europe is an easy destination for US ships. It’s a straight line from the Gulf of Mexico. On the other hand, the buyer countries must be equipped with sufficient storage capacities and pipeline networks in order to avoid bottlenecks», continues Fred Hutchison.

Climate requirements must also be taken into account, in Europe as in the United States. “LNG projects take four to five years to build. They are launched with an investment horizon of twenty years. For a European company aiming to reach the continent’s carbon neutrality goals by 2050, this timing poses a problem. A European consumer might still want gas in 2025 and 2030, but not in 2040 and even less in 2045. This delay is holding American companies back who want to develop with European support.” believes Nikos Tsafos.

So Joe Biden faces a delicate balancing act between the environmental groups, which accuse him of turning his back on his environmental promises, and the energy industry, which wants to conquer new markets. “There is a double challenge” paid tribute to Melanie Nakagawa, the climate and energy director in the National Security Council, who advises the president, during a conference in Washington in late April. We must help Europeans to diversify their LNG sources, but also to reduce the overall demand for gas. »

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shale gas and conventional gas

Like conventional gas, shale gas consists mainly of methane.

It is their extraction method that differs because their geological location is not the same.

Conventional gas was formed in a sedimentary rock rich in organic matter before migrating high into the basement and then accumulating in a pocket reservoir from which it is sufficient to draw.

Shale gas is trapped in rock with very low permeability that needs to be fractured — fractured — to release it and then bring it to the surface.

Fracking uses fluids that are injected under very high pressure and consist of a mixture of water, sand and additives.

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