The Russian invasion of Ukraine did not only bring bountiful returns to the armament corporations, the oil industries and the grain market but as this article pointed out, the American gas producers benefited profitably from the conflict.
The crisis in Ukraine has helped several LNG companies record bumper profits this year. The export company Cheniere earned $3.8bn more in cash from its operations in the first half of 2022 compared to the same period last year, while Sempra, a gas liquifying company, has enjoyed an eight-fold increase in LNG sales to Europe.
Just one day after the Russian attack upon Ukraine, the gas lobby issued to Biden a list of demands: more drilling on US public lands; the swift approval of proposed gas export terminals; and pressure on the Federal Energy Regulatory Commission, an independent agency, to green-light pending gas pipelines, to avoid the anticipated energy shortage.
The US gas industry has achieved almost all of its initial objectives. Within weeks, Biden adopted the gas industry’s major demands as policy, paving the way for new pipelines and export facilities, establishing a new taskforce to boost gas exports to Europe.
“I can’t even begin to tell you how much the momentum has changed for companies in the United States that have wanted to bring their projects forward and just haven’t been able to get long-term contracts,” said a jubilant Fred Hutchison, president of LNG Allies, the industry group. Biden administration, which styled itself as deeply committed to tackling the climate crisis, had “changed substantially” within just a week, Hutchison noted.
US LNG Association group wanted six specific gas export applications to be expedited, and within three weeks the US department of energy granted two of them, Cheniere Energy’s Sabine Pass project in Louisiana and its Corpus Christi operation in Texas. By the end of April, two further LNG export licenses had been issued. “Four down and two to go!
American LNG exports are set to grow an additional 20% by the end of this year. Biden has vowed to supply the European Union with at least 15 billion cubic meters of gas, equivalent to about half the amount of gas burned by Spain each year, by the end of 2022.
But the embrace of liquified natural gas (LNG) dismayed climate activists who warn it will lock in decades of planet-heating emissions and push the world closer to climate catastrophe. The International Energy Agency has said no new fossil fuel infrastructure can be built if the world is to avoid dangerous global heating.
Zorka Milin, senior advisor at Global Witness, said, the US gas industry was “licking its lips” at the onset of the Ukraine war.
“There is no doubt that Biden’s apparent capitulation to the gas industry has opened the door for these companies to continue to profit off the backs of those suffering in Ukraine, those living close to new gas infrastructure in the US and the millions affected by climate change globally.”
Milin explained, “Russia’s aggression in Ukraine, rising energy prices and the devastating impacts of climate change should be the biggest prompt yet to end the world’s dependence on fossil fuels,” said Milin. “Instead, an already rich industry is trying to seize the moment and force the world to double down on the very mistakes that have led us to this situation.”
Much of the new gas infrastructure won’t be operational for several years, which may be beyond the timeframe of the Russia-Ukraine conflict that has squeezed supplies and caused gas prices to spike. So much LNG export is planned or under construction, adding up to around a half of all total US gas production, that it will likely cause gas prices to climb for domestic American users, according to Clark Williams-Derry, analyst at the Institute for Energy Economics and Financial Analysis.
“It’s beginning to eat into the amount of gas available to domestic consumers,” said Williams-Derry. “We will see very severe impacts on domestic US gas prices, we will see the impacts for as long as the eye can see.”
Gas has long been touted as a helpful “bridge fuel” in dealing with the climate crisis as it emits less carbon dioxide than coal or oil and provides energy for processes such as steel making that renewables can’t quite manage yet. But the extraction, transportation and liquefaction required to create LNG for export creates almost as much emissions as burning the gas itself. LNG’s greenhouse gas impact is “at best, only modestly smaller than that of other fossil fuels”.