LNG The EU is transitioning to LNG – leading the industry Mufson 14

LNG

The EU is transitioning to LNG – leading the industry

One of the companies most entwined in the natural gas business in Europe is the Italian oil giant ENI – and that has put it smack in the middle of the crisis between Russia and western nations. ENI is the biggest seller of natural gas in Europe, providing 22 percent of the market. It is also the biggest customer of the Russian gas monopoly Gazprom, worth about 10 billion euros a year, and it might join with Gazprom to build a new pipeline under the Black Sea. It has a deal with Russia’s biggest oil company, Rosneft, to explore in the Barents Sea. It also has rights to look for shale gas in Ukraine and plans to propose reworking some old neglected oil and gas fields there to boost output. And it is the largest natural gas producer in Libya, a key source of natural gas for Europe. Altogether, ENI operates in about 90 countries. On Thursday ENI’s chief executive, Paolo Scaroni, was in Washington to meet with Obama administration officials at the State Department and National Security Council to discuss natural gas, Russia and Ukraine. Scaroni was visiting on the heels of hearings in Congress where lawmakers were calling on the administration to approve more liquefied natural gas (LNG) export terminals so that LNG from abundant domestic shale gas reserves could ease European dependence on Russia. But the committees didn’t get to hear from anyone with Scaroni’s background and distinctive points of view. The CEO took an hour to talk with The Post. Here are some excerpts from the conversation. On Europe's need for Russian oil: This Ukrainian crisis showed finally that the king is naked, that Europe is not independent -- because if you’re not independent on energy you’re not independent. People say Russia needs Europe, as well. But we need energy every day, and they can skip a year. It’s a different level of urgency and dependency. What is relevant is that this dependency is going to go up and not down because domestic European production [including North Africa] is going down. Norwegian production is not going up. Algerian production is going up, but Algerian domestic consumption is going up, too. And Libya is Libya. We are the persons in the world who know Libya best, and we know nothing. I was in Libya last Sunday. We have 3,000 people there and still we don’t know much. Scaroni takes a dim view of American LNG as a means to liberate Europe from Russian gas, in part because he says that transporting LNG from the United States to Europe is expensive, Russian gas production costs are very low and Russia could always decide to undercut American LNG prices.

EU is leading the LNG industry

CEC 13, California Energy Commission, nearest date given is 2013, CEC is a news agency stationed in California that explores different forms of renewable energy, “Western Europe - Liquefied Natural Gas (LNG),” http://www.energy.ca.gov/lng/worldwide_western_europe.html, NN

This region of the world is dominated by LNG regasification terminals. The first LNG liquefaction terminal, Snohvit LNG, has recently begun operating. This facility is located in the Kingdom of Norway, above the Arctic Circle. According to recent media reports, StatoilHydro, the Norwegian offshore oil and gas producer, began geological carbon sequestration at the Snohvit field. This greenhouse gas emission reduction technology is also being considered at LNG liquefaction terminals in the Republic Trinidad and Tobago and the Commonwealth of Australia. In an effort to reduce Western Europe's reliance on the Russian Federation's Gazprom, several LNG regasification terminals have been constructed, are under construction or have been proposed. There are sixteen existing LNG regasification terminals spread across Portugal (also known as the Portuguese Republic), Kingdom of Spain, France (also known as the French Republic), Kingdom of Belgium, the United Kingdom, Italy (also known as the Italian Republic), Greece (also known as the Hellenic Republic) and the Republic of Turkey. map of Western Europe showing LNG terminals with link to download PDF file of map Fifty two additional LNG regasification terminal projects are either under consideration or have commenced construction throughout this region, specifically in the Republic of Albania, the Republic of Croatia, Republic of Cyprus, the Federal Republic of Germany, Republic of Ireland, Kingdom of the Netherlands, Republic of Poland, Romania, and Ukraine. Further consideration is being given to LNG by the Republic of Lithuania and in a joint project between the Republics of Estonia and Finland. One controversial proposed LNG regasification terminal in Italy, Offshore LNG Toscana, would be located in a whale sanctuary, Cetaceans Sanctuary of the Mediterranean. The project was approved under the previous Prime Minister's term, but is being opposed by local government and environmental groups. In addition to this, the Italian government recently suspended the building permit for the proposed Brindisi LNG regasification terminal. Currently, Italy only has one operating LNG regasification terminal, Panigaglia LNG. However, the current Industry minister foresees the need of possibly four additional new regasification terminals by the close of 2010.

The EU solves liquidified natural gas production – the US isn’t key

Baker 14, Dean Baker, 3/24/14, Dean Baker is co-director of the Center for Economic and Policy Research, “Europe doesn’t need America’s fracked natural gas,” http://america.aljazeera.com/opinions/2014/3/europe-russia-naturalgasenergy.html, NN

The weaners seem to have the impression that this is yet another case in which the United States has to come to the rescue of those weak Europeans. After all, while we were drilling everywhere, the Europeans were fiddling around with wind and solar energy, all the while making themselves vulnerable to Russian President Vladimir Putin’s machinations. Reality-based fans of arithmetic see matters differently. The reality is that Europe, especially Germany, has done a huge amount over the last two decades to reduce its consumption of fossil fuels, including natural gas, from Russia. The reduction in fossil fuel use swamps the impact of the drill-everywhere strategy in the United States. If Europe had not been aggressively pushing to reduce its energy use, there is no way that gas from Russia could be replaced by domestically fracked gas or imports from elsewhere. In addition, Europe’s efforts to reduce fuel consumption have the advantage of slowing global warming. According to the Energy Information Agency, Germany’s conservation measures have had the effect of reducing its energy intensity of production (the amount of energy used per dollar of GDP) by roughly 30 percent over the last two decades. While the United States has seen a comparable percentage reduction in its energy intensity, its energy intensity of production is still far higher than Germany’s. In fact, the current level of energy intensity in the United States is higher than the energy intensity of Germany’s economy in 1991. If Germany were as energy inefficient as the U.S., it would need over 50 percent more energy to meet its needs. In addition, Germany now generates almost a quarter of its energy from renewable energy sources. The vast majority of this energy comes from wind and solar, with hydropower counting for less than a quarter. If Germany and other European Union countries had not been aggressively promoting conservation and alternative energy sources, the price of Russia’s natural gas would probably be close to twice its current levels. The demand for natural gas would be far higher; the only countervailing factor would be the extent to which dirtier energy sources such as coal might have been used instead. If the goal is to reduce demand for Russian natural gas, the most cost-effective way is to do much more of what Germany is already doing: promote conservation and mass transit and further subsidize the cost of installing solar and wind energy. The idea that the United States can fill any significant portion of Europe’s need for natural gas with fracked gas and that this gas could available anytime soon, as hypothesized by some pundits, is simply not realistic. The amount of gas that the European Union imports from Russia is more than half of total U.S. production. It would take an enormous ramping up of natural gas production in the United States to be able to export any substantial amount to the EU without shortages leading to sharp jumps in price in the United States. That seems unlikely even if we decided to ignore all environmental considerations. Many of the new fields already have declining production, so it would take a huge increase in drilling to fill the gap and add capacity to allow for large-scale exports to the EU. In addition, we would have to increase our ability to liquefy and export natural gas. This can be done, but it takes time and money. One industry source put the full cost of constructing an export facility at $30 billion. This is money that could be recovered only through many years of exporting large volumes of natural gas. And these facilities would take years to build. Even in an optimistic scenario, large volumes of liquefied natural gas would probably not be heading to Europe until the end of the decade.

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