mark warnerBy Peter Galuszka

One way to clip the wings of Russian President Vladimir Putin and his aggressive land grabs, says U.S. Sen. Mark Warner who is running for reelection, is to expedite permitting of the 20 or so proposals to export liquefied natural gas, including one by Richmond-based Dominion Resources.

“Most of Europe and Ukraine are heavily dependent on Russian gas in particular for their energy use,” Warner told reporters. Europe depends on Russia for 30 percent of its gas.

It is true that hydraulic fracking has turned the oil and gas business in the U.S. upside down by creating such a flood of products that the U.S. may not only become energy independent but in a position to export. Environmentalists point out that fracking has its dangers but the remarkable change in energy dynamics plays to the producers’ hands.

The big problems with Warner’s proposal are that exporting LNG to Europe will be more time-consuming and costly than he might imagine. It also does nothing to address the climate change issues that gas contributes to, albeit not as much as coal.

One reason why Warner may be so interested in the issue — House Speaker John Boehner, a Republican, is making exactly the same proposal — is because of Dominion. The utility plans a $3.8 billion expansion of its Cove Point, Md. LNG import facility on Chesapeake Bay so that it can export LNG as well. Some of that gas could very well come from fracking operations in the Marcellus Shale fields of Pennsylvania and West Virginia along with the Gulf Coast.

Dominion is in the permitting process – perhaps No. 3 or 4 in line – for Cove Point. It has the gear to take super cold gas pf about minus 265 degrees and warm it up to a gaseous state so it can be sent through pipelines. Now it wants equipment to reverse the process – take gas and chill it into shippable LNG. Dominion has everything else it needs – a water terminal, tanks, and so on.

Warner, of course, gets lots of campaign money from Dominion and has just brought on as his campaign manager Eva Teig Hardy, who retired as one of Dominion’s top lobbyists and public affairs executives. I have known Eva since the 1970s and can attest that she is supremely competent.

There’s nothing wrong with Warner’s ties to Dominion although they should be known. What is troublesome is that his plan may not work.

Take Dominion. If Dominion gets its permits, it won’t be able to export LNG for maybe three years. By that time Putin will either have calmed down or gone beyond Crimea to conquer Europe as far as the Czech Republic or maybe France.

Dominion already has customers lined up for its LNG and they aren’t in Europe. They are utilities in India and Japan – which are the markets of choice for many of the American export hopefuls.

And as Steve Mufson of The Washington Post points out, while Russia exports gas via pipelines to Europe, it still isn’t as big a supplier as Norway. In fact, Cove Point used to see the odd tanker full of Norwegian LNG pull up at its bay terminal. Why can’t Norway increase its sales on the Continent?

Europe would have to build more LNG import facilities and that may take a few years. Meanwhile, the global money seems to be on sending LNG to Asia.

Mufson, in a separate article, has an interesting proposal that would address what Warner does not – namely somehow linking the cornucopia of natural gas with what Virginia, the U.S. and the world really need – more renewable energy sources as well as ones that emit less carbon.

The idea is to export LNG and coal but charge a special fee. The fee, based on so many cents per British Thermal Units, would be put in an infrastructure bank that could fund such projects as coal-burning generating stations that have sophisticated carbon capture equipment.

The gear is extremely expensive but it might do the trick about reducing carbon emissions. The problem now is that utilities need regulatory approval to charge extra fees to customers for carbon capture gear. The regulators are often hampered by laws requiring them to order the utility to go with the cheapest form of energy available. If gas is cheapest, then it’s gas.

Just an idea, but Warner ought to be exploring it rather than cashing on the news of the day to boost Dominion in a rather dreamy plan.

PS: For those dear readers who are gluttons for punishment, here’s a link of me on a panel at Montgomery County Public Television in Rockville, Md., discussing Cove Point. It was taped March 7.

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11 responses to “Mark Warner: Let’s Out-Gas Putin”

  1. unfortunately – despite Mr. Warners and Boehmer and others including the NeoCons advice – here’s what we gonna have:

  2. Darrell Avatar

    Why do you think Kerry is running around in a tizzy? The whole idea behind Fracking is to sell the gas and oil to Europe. It has nothing to do with developing OUR energy independence.

  3. Warner’s proposal makes sense to me. I’d support selling LNG to Europe even if Putin wasn’t being disagreeable. The prospect of reducing the Europeans’ dependence upon Russian gas is icing on the cake.

    1. Jim – Don’t you think that a company exporting LNG is going to export it to the highest bidder unless the US subsidizes it for Ukraine?

      would you support that?

      and second…

      what do Conservatives say when the price of oil and energy goes up?

      don’t they say it kills jobs..?

      Is Nat Gas a key competitive advantage for the countries that have it natively?

      companies do own the gas – but how do they get it to market?

      doesn’t it go through pipelines whose rights of ways were obtained via government eminent domain?

      If we export natural gas to the highest bidders overseas (put aside subsidizing the Ukraine for now) – if we export to highest bidders what happens to the price of gas to US residential customers and industry?

      one more quick question –

      if someone told you that our nat gas was about a 50 year supply before it ran out – what would you say?

      how about 100 years?

      do you know how long the nat gas will last ? do you know what we do after it runs out?

  4. Breckinridge Avatar

    I hate to sound like an isolationist but what is going on in Europe has me questioning whether we want to export LNG or whether we’d be smarter to keep it here in the western hemisphere. I have no sympathy for the Germans, shutting down perfectly good nuclear plants in order to sell their manhood (personhood?) to Putin. I’m normally a fan of free markets, assuming that everybody is a winner, but this is economic war and I think the Europeans need to do a bit more to solve their own dependency.

    1. fossil fuels are finite.. despite what some folks think…

      and increases in gas, coal and oil prices in the US is harmful to manufacturing, jobs and the economy.

      it just seems like a dumb idea to me.

      better we go help Ukraine exploit their own frack gas, in my view.

  5. billsblots Avatar

    As they tried to teach my dad when he was in high school, there were only 50 years of oil reserves left in the world. that was 1932. they also taught the world had had the war to end all wars because everyone had agreed it was so heinous.

  6. the resources are finite but reports of their depletion are exaggerated.

    but we’ve spent the last how many years and fighting wars over oil?

    so it’s not like we don’t have issues with energy reserves and right now we are closing coal plants and replacing them with natgas plants.

    if we export gas – what happens to the domestic price.. the price of electricity, etc?

  7. Breckinridge Avatar

    I agree with billsblots that fears of finite supplies can be overblown, and in the case of natural gas there is reason to believe plenty more is out there to be found. But doing so takes time and capital and selling a large chunk of what we have tapped to the export market is not going to lower the price. One of these LNG tankers blows in the wrong place and people will look back with fondness on casualty-free Three Mile Island….

    1. re: finite resources – I’m not of the school that we are soon to run out of resources but having said that – we have no shortage of oil wells that have or are played and no longer producing and unless you’re from the school that believes oil regenerates…endlessly, then it’s a good indication that it IS finite.

      how long before we use up what we know about and find more we did not? I don’t know but was asking if anyone has heard any estimates of how much frack gas we have found and how long that might last…??

      but more than that – how much extra do we have such that we could export it and not drive the price of domestic gas up?

      or …are we okay with higher price domestic gas and the effect it has on industry, jobs and residential prices? In the past, we have made much of the effect that regulations have on the price of energy .. but export also affects price.. right?

      I’m a “skeptic” that we can really afford to export it without it extracting some costs to our own economic interests. do we know or care?

      since the US and the states provide material help to the companies that produce gas – in the form of pipeline rights-of-ways obtained via eminent domain – does the US have some right to regulate the exports?

  8. I realize playing the “how much reserves do we have” is a less than ironclad projection but ask the question and this is an example of what you get from the EIA – the US Energy Information Agency :

    ” About 141 trillion cubic feet of gas can be recovered from the Marcellus shale using current technology, down from the previous estimate of 410 trillion, the department said today in its Annual Energy Outlook. About 482 trillion cubic feet can be produced from shale basins across the U.S., down 42 percent from 827 trillion in last year’s outlook.

    “Drilling in the Marcellus accelerated rapidly in 2010 and 2011, so that there is far more information available today than a year ago,” the department said. The estimates represent unproved technically recoverable gas. The daily rate of Marcellus production doubled during 2011.

    The estimated Marcellus reserves would meet U.S. gas demand for about six years, using 2010 consumption data, according to the Energy Department, down from 17 years in the previous outlook.”

    this was in 2012 and more searching will probably did up more predictions but the germane point to me is that we’re talking decades – and on the short side of decades.

    also – from the same Bloombert report of the EIA statements:

    ” The U.S. Geological Survey said in August that it would reduce its estimate of undiscovered Marcellus Shale natural gas by as much as 80 percent after an updated assessment by government geologists.

    Shale gas will probably account for 49 percent of total U.S. dry gas production in 2035, up from 23 percent in 2010, the Energy Department said today.

    Gas’s share of electric power generation will increase to 27 percent in 2035 from 24 percent in 2010, the report showed.

    The department also said the U.S. may become a net exporter of liquefied natural gas in 2016 and a net exporter of natural gas in 2021. U.S. LNG exports may start with a capacity of 1.1 billion cubic feet a day in 2016 and increase by an additional 1.1 billion cubic feet per day in 2019, the department said.”

    I find it a bit odd that this country treats oil as a strategic resource – so much so that we consider oil in the Middle East of strategic importance to us – enough so for us to send our young to die and drive our budget to deficit and run up debt to the Chinese.

    we also think gas is strategic to the Ukraine… and Europe…

    but it’s not strategic to us and we can export it even though we’re estimating that it will run out in a few decades?

    this is where I end up confused about what our energy policies are in terms of strategic importance and what our views are with regard to entrepreneurs in the private sector exporting our energy resources for personal and corporate profit.

    is there a downstream plan for the US on energy?

    are we betting that solar/wind or something else will mature at about the time we exhaust our gas reserves?

    I do not presume to know.. I have 10 times as many questions as I even think I might have answers… and it can make my brain hurt trying to sort it all out.

    And I do respect Mr. Warner as a reasonable person -imminently so compared to some of the other wacko-nuts walking the halls of Congress these days.

    but if we decide to justify exports of gas to Ukraine – does anyone seriously doubt that we’ll restrict exports only to Ukraine and not end up selling as much as we can to the highest world bidder even if it drives up the price domestically?

    do we think we have so many reserves that this is worrying about nothing?

    what I read so far tells me that our gas reserves are limited – not plentiful as far as the eye ( or mind or estimated projections) can see.

    Natural Gas is the perfect energy complement to wind/solar… every pound/gallon of natural gas can buy you more reliable wind/solar – because when wind/solar die down, Nat Gas powers up instantaneously – something the coal and nuke plants cannot do – and cited many times as the reason why wind/solar are not dependable sources of energy. With Nat Gas – you can leverage wind/solar into something useful and reliable.

    the day will come when nat gas starts to decline. At that point – will we revert to coal or build more nukes or what?

    I think I know what Breckinridge will say.. and perhaps I’ll agree if we can build nukes that will not melt down when they break.. that instead, they’ll auto-shutdown and they’ll be safe enough that we can put them closer to urban areas and not be fearful of terrorists turning them into Japan-like disasters.

    Nat Gas is our bridge to that hopeful future, in my view.

    I think it is shortsighted to see it as something we can consume all of right now then worry later what we do next.

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