Is dependence on gas from the US better than that from Russia? Not really…
Europe's desperate attempt to get rid of Russian gas became even more urgent this week, when Moscow announced that flows through Nord Stream 1 to Germany will be cut off until sanctions are lifted by the West. This desperation has caused Europe to supplant Asia as the main destination for US LNG. In fact, Europe now receives 65% of the total US LNG exports . But there is growing fear that swapping one addiction for another involves another type of risk. P oiling everything on US LNG means relying on Mother Nature. U.S. LNG supplies may not be vulnerable to Putin's policy, but they are vulnerable to extreme weather conditions and hurricane seasons that disrupt production and exports. Europe cannot afford any more interruptions.
Most of the LNG export facilities in the United States, including future ones, are located along the Gulf Coast, and much of the gas that powers these plants comes from nearby inland reserves, from New Mexico and Texas to Louisiana and beyond. It is a hurricane-prone region, which means that when hurricanes hit it, everything from liquefaction to shipping, mining to processing , is at risk of disruption.
In recent years, several hurricanes have caused varying degrees of disruption to the liquid gas market, with impacts that extend throughout the supply chain, from short interruptions to long interruptions in processing and shipping. In 2020, Hurricane Laura caused a two-week outage for the Sabine Pass LNG export facility and over a month for Cameron LNG. Last year, Hurricane Ida caused a major and prolonged disruption of offshore gas production. This year, an explosion in June at the Texan Freeport LNG plant knocked out nearly 20% of the U.S. LNG export capacity, sending LNG markets into a tailspin.
Scientists say Gulf Coast hurricanes are becoming more severe, causing record-breaking overall floods and putting critical infrastructure at risk. Meanwhile, while the United States has the largest set of new LNG projects in the world in the pipeline, there are also limitations to the reach of these projects without increased pipeline capacity to accommodate this booming energy segment.
In the Appalachian Basin, the country's largest gas-producing region producing more than 35 Bcf / d, environmental groups have repeatedly blocked or slowed pipeline projects and limited further growth in the Northeast. This leaves the Permian Basin and the Haynesville Shale to bear much of the expected growth in LNG exports. In fact, EQT Corp CEO Toby Rice recently acknowledged that the capacity of the Appalachian pipelines has "hit a limit."
Among other things, Europe expects US gas to be extracted with the same fracking techniques that are prohibited in several EU countries, France and Germany in the lead. An incredible hypocrisy that, over time, will fuel opposition to exports from the USA, both for ecological and economic reasons, due to the impact on the price of domestic gas.
Having a dominant external supplier is always a great danger, but everyone in Europe is too smart to understand.
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The article Is dependence on gas from the US better than that from Russia? Not really… it comes from ScenariEconomici.it .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/la-dipendenza-dal-gas-dagli-usa-e-migliore-di-quella-dalla-russia-non-proprio/ on Tue, 06 Sep 2022 08:00:56 +0000.