With an increased focus on renewables, it seemed as if the U.S. natural gas industry was relegated to the backburner. But, given the current energy crisis in Europe, natural gas production finds itself at the center of the geopolitical storm.
Look no further than the last six months to highlight that a robust natural gas industry is vital to U.S. foreign policy.
The EU proposes a change
The new year saw a decision from the European Commission to include natural gas in its plan for a climate-friendly future. By classifying the resource as a “sustainable investment,” it opened the door for public and private investors to position natural gas as a “transitional” energy source to help the EU meet its goal of becoming climate neutral by 2050. However, given the size of the European economy, a complete transition to a predominantly renewable-based energy portfolio was never realistic. This move comes a little too late to combat the crisis gripping the continent, resulting in the need for U.S. imports for relief.
LNG exports see new highs
Throughout 2021, the U.S. was steadily exporting liquefied natural gas to Asia, Europe and Africa, in part to ease energy-supply problems. This peaked in early December, when a cold snap on the European continent, coupled with natural gas flow from Russia much lower than expected, resulted in a surge of exports across the Atlantic. We shipped so much, in fact, that for the first time the U.S. became the world’s leading exporter of LNG.
An unheeded warning
At the same time, Russia was awaiting German approvals to put into operation its $11 billion Nord Stream 2 pipeline, designed to bring natural gas from Russia directly to the European market, making much of the world – and certainly Ukraine – nervous about Russia’s growing energy dominance in the region.
As the Marcellus Shale Coalition noted last July, “Some countries, like Russia, use energy as a geopolitical weapon … posing severe national security threats for the U.S. and our allies.”
The MSC’s words ring more true now than ever.
After the beginning of Russia’s invasion of Ukraine, Germany acted swiftly to halt certification of the pipeline. Oil giants Shell and BP have divested from the Nord Stream and other Russian state-owned natural gas projects.
Sanctions missing a key element
Europe gets about a third of its natural gas from Russia, which in late 2021 already had cut in half the amount it made available to other countries in the region. Although sanctions imposed on Russia at the start of the conflict thus far have excluded energy, the White House and the EU have said they still could be considered. Even without targeting the sector, the economic sanctions already in place are so broad that they could have trickle-down consequences for the region’s energy supply, which is far too dependent on exports from Russia.
We must continue to rise to the occasion
It’s only because of continued investment in the infrastructure and maintenance of the natural gas industry that the U.S. is in the position to assist our European allies. One energy historian told the New York Times that “Europe would have basically caved,” if not for the U.S. LNG supply. Clearly, keeping a robust and healthy natural gas industry makes for stronger U.S. foreign policy and a stronger country. It ensures a more stable geopolitical climate while allowing us to be energy independent.
