Ukraine Crisis Fueling Natural Gas Exports Debate

The Ukraine crisis is adding fuel to the natural gas export debate that’s been brewing in Congress. Sen. John Barrasso, R-WY, is proposing that an amendment to lift restrictions on U.S. natural-gas exports be added to the Senate aid package for Ukraine. On March 5, Sen. Mark Udall, D-CO, a senior member of the U.S. Senate Energy and Natural Resources Committee, introduced legislation to increase the ability of energy firms to export liquefied natural gas. Sen. Udall preceded the legislation’s introduction by noting that:

The situation in Ukraine shows the urgent need for Colorado and the nation to export more natural gas. When foreign powers like Russia are able to exploit their monopoly on energy exports to coerce their neighbors, it weakens the international community’s ability to promote stability and avert conflicts.

Currently, under the Natural Gas Act (1938), exports of natural gas are generally limited to countries that have a free-trade deal with the U.S.. Sen. Udall’s recently introduced legislation, known as “The American Job Creation and Strategic Alliances LNG Act” would modify a part of the Natural Gas Act to allow natural gas exports to World Trade Organization member countries. Of course, under this provision, Ukraine and neighboring countries would then be eligible to receive exported natural gas.

However, many energy experts say that the real problem with natural gas exports is not the governmental red-tape involved with actually exporting it, but the dearth of infrastructure to liquefy the natural gas for overseas shipment. There are now six applications for LNG (liquid natural gas) export facilities that have been approved, but only one of them is under construction. This is Cheniere’s $10 billion Sabine Pass terminal in Cameron Parish, Louisiana, which just recently received its required approvals from the U.S. Department of Energy and U.S. Federal Energy Regulatory Commission as well as from any state regulators that are needed. LNG shipments from this facility are scheduled to start in late 2015. As approval processes for LNG export terminals are lengthy, it is unlikely that the other applied-for LNG export terminals would be operational soon. As Energy Secretary Ernest Moniz said earlier this week during a major energy conference in Houston:

After the Cheniere license, the most optimistic view for the next set of LNG shipments to leave the U.S. isn’t until 2017 or 2018, according to Moniz. “So, there’s still quite a ways to go,” he says.

Aside from the natural gas export ban and the lack of infrastructure, the exporting of natural gas also begs the question of what will its price be once it is on the global market? The price of U.S. produced natural gas is much, much lower in the U.S. than natural gas sold elsewhere. An earlier Geopostings blog detailed how the spot price of domestic gas is set and how natural gas prices overseas are typically “oil-linked”, which means the price is coupled to the per-unit energy cost of crude oil. Suffice it to say that it is a real possibility that natural gas prices for domestic consumption will rise, and could rise precipitously. It is also a real possibility that as a market-driven commodity, U.S. produced natural gas will be exported not to Europe, but to the Asian market, where it will command a higher price.

As I said before in my earlier Geopostings blog on natural gas exporting/pricing:

All in all, 2014 is already shaping up as a very interesting year for US natural gas, LNG exports, and US energy policy.

 

The Uber Grid Push Is Back

The push for the uber grid raised its head again in the New York Time’s 7.12.13 edition. Matt Wald plugs the new EIPC (Eastern Interconnection Planning Collaborative) “hypothetical” nationalized grid as a “step forward”.

As Mr. Wald reports,

When President Obama presented his plans last month for executive action that would cut emissions of greenhouse gases, one item on his list was strengthening the power grid. It was on the lists of President George W. Bush and Mr. Clinton, too. But for the most part, experts say the grid is not being changed, at least not on a scale big enough to make much difference.

Their view is reflected in what they say is a largely hypothetical three-year effort by hundreds of engineers to redraw the grid for the eastern two-thirds of the United States. Engineers in the project, which is now drawing to a close, have proposed a basic redesign for beefing up the Eastern Interconnection, the part of the grid that stretches from Nova Scotia to New Orleans.

You may wonder what is EIPC and what is its function? Here’s how EIPC describes itself:

The EIPC was initiated by a coalition of regional Planning Authorities (see list below). These Planning Authorities are entities listed on the NERC compliance registry as Planning Authorities and represent the entire Eastern Interconnection.

The EIPC will provide a grass-roots approach which builds upon the regional expansion plans developed each year by regional stakeholders in collaboration with their respective NERC Planning Authorities. This approach will provide coordinated interregional analysis for the entire Eastern Interconnection guided by the consensus input of an open and transparent stakeholder process.

The EIPC received funding from the U.S. Department of Energy in 2010 to initiate a broad-based, transparent collaborative process to involve interested stakeholders in the development of policy futures for transmission analysis. Learn more about the DOE-funded project.

The Stakeholder Steering Committee (SSC) is the body of stakeholder representatives that works collaboratively to inform and provide input on the EIPC’s efforts. Learn more about the SSC.

Planning Authorities:

Alcoa Power Generating

American Transmission Company

Duke Energy Carolinas

Electric Energy Inc.

Entergy

LGE/KU (Louisville/Kentucky Utilities)

Florida Power & Light

Georgia Transmission Corporation

IESO (Ontario, Canada)

International Transmission Company

ISO-New England

JEA (Jacksonville, Florida)

MAPPCOR

Midwest ISO

Municipal Electric Authority of Georgia

New Brunswick System Operator

New York ISO

PJM Interconnection

PowerSouth Energy Coop

Progress Energy – Carolinas

Progress Energy – Florida

South Carolina Electric & Gas

Santee Cooper

Southern Company

Southwest Power Pool

Tennessee Valley Authority.

 

As aptly noted in The Power Line blog in response to Mr. Wald’s uber grid writings:

See all that talk about “transparent,” “stakeholders” and “grassroots”?  That is corporate mumbo jumbo of the first order.  Ain’t nothing grassroots about EIPC.  Mr. Wald should go back to reporter school.  You don’t write an article and leave out all the important names.  Unless you are trying to hide something.

I also agree with The Power Line on the clincher to the EIPC’s uber grid vision stated by Christopher Russo, an energy consultant at Charles River Associates (a company that helped with the grid redesign):

“We said, ‘Here’s what we could do,’ ” he said. “We haven’t said how we would pay for it.”

I’ve wondered about that “pay for” part in regards to proposed high-voltage transmission in the western U.S.