Pennsylvania gas producers look to export to Europe amid Russian invasion of Ukraine
Pennsylvania gas producers are looking to help supply natural gas to Ukraine and in Europe, in the face of the Russian attack and limited energy supply.
On Thursday, President Biden said economic sanctions against Russia would skirt impacts to the energy sector, but Europe currently relies on Russia for as much as 40% of its natural gas supply, and that has many people worried.
This could be an opening for Pennsylvania and surrounding states, industry boosters said.
“We have the opportunity, we have the means, to help supply them with additional supplies of natural gas from the United States,” said David Callahan, president of the Marcellus Shale Coalition, which represents gas producers in the Appalachian region.
“Energy is one of the ways that we could definitely help them alleviate the threats from this Russian invasion of Ukraine.”
Even before the current conflict, gas prices in Europe were at record highs, and U.S. gas production had started increasing in response to that.
“We’ve seen the rig count tick up a little bit here, regionally and nationally,” Callahan said. “So yes, there is increased activity in response to those price signals, and in response to the crisis as well.”
Europe’s “perfect storm” of gas usage
Europe has had what Dustin Meyer, vice president of Natural Gas Markets at the American Petroleum Institute (API), calls “a little bit of a perfect storm.”
“Their domestic production of natural gas has fallen precipitously over the last decade. That’s been a long-standing trend that’s left them more dependent on imports,” he said. “Simultaneously, last year, they had a very cold winter, and then they had a hot summer. That’s a recipe for using more natural gas than what you otherwise would.”
That meant Europe entered last winter with low levels of energy in storage, and even though prices were high, Russian pipeline flows were lower than the five-year average. “That’s when the gas markets started to suspect that there was something going on in terms of Russia’s strategy in terms of natural gas going forward,” Meyer said.
At this point, he’s hearing that Russia is still sending gas through Ukraine and into Europe, “but there remains a tremendous amount of uncertainty.”
New export business?
That could mean new export business for U.S. gas producers, according to William Reinsch, senior adviser at the Washington-based Center for Strategic and International Studies, who ran the U.S. export control program during the Clinton administration.
“One of the consequences of what’s happened is that Western Europe is going to find ways to develop substitutes for Russian gas because it’s clearly going to be perceived as an unreliable source of supply under the circumstances,” Reinsch said.
How much of that will come from Pennsylvania is unclear. But the U.S. is projected to be the world’s largest liquefied natural gas (LNG) exporter in 2022, and Pennsylvania is the second biggest gas-producing state, behind only Texas.
European countries have already been looking for new natural gas sources. “This is a process that’s underway, but the invasion of Ukraine will accelerate it. The United States has already increased its exports of LNG to Europe,” Reinsch said.
Increasing production will take time
But ramping that up enough to replace Russian sources won’t happen overnight. “This is not like next month, this is something that’s going to happen over a period of years,” he said.
Oil and gas groups, including the API and Pennsylvania’s Marcellus Shale Coalition, are calling on state and federal leaders to get approvals for long-term projects, like gas pipelines and other methods of transport.
But environmental groups say the crisis shows a need to expand renewable energy.
“Trading dependence on Russian gas for dependence on more expensive US-sourced LNG isn’t a sustainable solution” for Europe, said Rob Altenburg, Energy Center director of PennFuture, in an email. “At this point, the best path forward for Europe is to invest in more clean renewable generation and efficiency instead of chaining itself to fossil fuels.”
Altenburg fears that increasing gas exports will also raise prices in the U.S., and delay progress towards meeting climate goals.
This story is produced in partnership with StateImpact Pennsylvania, a collaboration among The Allegheny Front, WPSU, WITF and WHYY to cover the commonwealth's energy economy.
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