Pas natural gas may not help Europe replace Russian supplies

Europe has been clamoring to buy more American natural gas in response to Russia’s invasion of Ukraine. As the second largest natural gas producer in the country, Pennsylvania is going to win, right?

Not necessarily.

Some oil and gas industry experts say that while Pennsylvania is a major producer in the Marcellus and Utica Shale formations, it is not well positioned to inject gas production into export markets to meet demand from Europe.

“US natural gas exports have experienced a solid pull,” said Dean Foreman, chief economist at the American Petroleum Institute. “But by and large, producers across Appalachia — Pennsylvania, Ohio, West Virginia — don’t have much access to selling their produce in international markets.”

According to Foreman, the capacity of the pipelines between the Appalachian gas fields and the huge Gulf Coast facilities that produce liquefied natural gas (LNG) for export by ship is limited. The result is that gas production in Appalachia is expected to be flat or down slightly this year, but production is booming in the Haynesville area of ​​Louisiana and east Texas, although gas production there is more expensive than Marcellus. Its advantage: more pipelines to the Gulf.

The East Coast has only one major LNG production facility for export, the Cove Point LNG in Lusby, Md., built in 1978 to import gas when US production was falling. The facility reopened as an export facility in 2016 after Dominion Energy invested $3.8 billion to install cryogenic equipment needed to cool natural gas to minus 260 degrees, turning it into a liquid. The plant can liquefy up to 770 million cubic feet of gas per day.

Other proposals to build liquefaction terminals on the east coast have drawn strong objections from climate advocates who see LNG as a long-term way to expand greenhouse gas emissions. Gas industry advocates argue that LNG burns cleaner than the carbon-intensive fuels it displaces, such as coal and diesel.

» READ MORE: Plan to send LNG trains through Philly to Port of S. Jersey sparks outrage from local residents and environmentalists

The United States only began exporting LNG six years ago after domestic natural gas production increased dramatically with exploration for shale, the geological rock formations that contain oil and gas, which was tapped with the development of hydraulic fracturing. Most of the large plants that liquefy natural gas for loading onto sea tankers are located on the Gulf Coast.

The United States can liquefy 11.6 billion cubic feet (Bcf) of gas per day, which the US Energy Information Administration says is expected to increase to 13.9 Bcf by the end of this year with the completion of several expansion projects. That would exceed the capacity of the next two largest LNG exporters, Australia and Qatar.

When the $10 billion Golden Pass LNG project in Sabine Pass, Texas, is scheduled to come online in 2024, the US’s peak export capacity will increase to 16.3 Bcf per day, according to the Department of Energy. For comparison, Russia supplied Europe with about 13 billion cubic feet of natural gas per day via pipelines in 2020, according to an EIA analysis.

Regional industry officials believe that if gas from the Marcellus is not exported directly, there are growth opportunities to substitute gas from other parts of the country as more of the country’s production is sent overseas. “I think Pennsylvania and the Appalachian region certainly have a role to play in that,” said David Callahan, president of the Marcellus Shale Coalition, the industry and trade group.

The oil and gas industry is rallying its supporters to urge President Joe Biden and Gov. Tom Wolf to lift restrictions on leasing public lands, speed up the approval of permits for new wells and remove obstacles to the development of fossil fuel infrastructure, including pipelines and facilities to mine to produce LNG for export.

“‘Drill, baby, drill’ must become our commonwealth’s rallying cry to maximize energy independence,” said State Assemblyman Daryl Metcalfe (R-Butler), chairman of the Pennsylvania House Environmental Resources and Energy Committee, in a series of pro-industry legislation last month , including lifting a moratorium on new leases on state-owned land for gas drilling.

Clean energy advocates say the industry is using Europe’s crisis to undermine progress made by environmentalists to curb fossil fuel development and greenhouse gas emissions, particularly related to infrastructure investments. Russia entered Ukraine on February 24, triggering Western sanctions and prompting Europe to reconsider its reliance on Russian energy imports.

“The industry knows they can’t get these plants up and running in a reasonable amount of time given what’s happening in Ukraine now,” said Maya van Rossum, director of the Delaware Riverkeeper Network. “But they understand that this is a good marketing moment to get public funding and permits to build these plants that will lock us to fossil fuels for decades.”

In recent years, pipeline operators have thrown in the towel on several major Marcellus Shale projects that have been fiercely opposed by environmentalists, including the Penn East Pipeline from Pennsylvania to New Jersey, the Constitution Pipeline from Pennsylvania to New York, and the West’s Atlantic Coast Pipeline Virginia in North Carolina and Virginia.

Pipeline cancellations have become so common that the US Energy Information Administration this month modeled the impact of not building more interstate pipelines, which it predicts would result in reduced gas production and higher energy costs by 2050. (This is also the year that climate advocates have set a goal of “net-zero” carbon emissions).

In 2018, a New York company called New Fortress Energy applied to build an $800 million LNG facility in northeastern Pennsylvania. The project differed from most LNG export facilities built next to wharves. New Fortress planned to truck and rail the production to New Fortress’ Repauno Marine Terminal in New Jersey near Philadelphia International Airport, where it would be loaded onto ships. Pennsylvania environmental authorities granted the project permits, and the Trump administration granted a special permit to ship the LNG by rail.

According to its 2021 annual report, New Fortress has spent $128 million over the past four years to prepare a 219-acre site along the Susquehanna River near Wyalusing, Bradford County. The plant would convert about 350 million cubic feet of natural gas per day into LNG, about 3% of the country’s LNG export capacity. The facility would have less than half the capacity of the facility at Cove Point.

But New Fortress did not begin construction. The federal railway license expired last year. Last month, after three environmental groups challenged the extension of the facility’s air emissions permits, New Fortress reached an agreement with green groups to allow those permits to expire this summer.

“This is a very good pause for operations in Wyalusing, but they certainly haven’t packed up and left town yet,” said Jessica R. O’Neill, a senior attorney at PennFuture, who also opposed New Fortress spoke out on Clean Air Council and the Sierra Club. The new fort cannot proceed with construction without applying for new permits, she said.

New Fortress did not respond to a request for comment, and it’s unclear why its project stalled. Gas markets collapsed during the 2020 pandemic and investors fled for cover during a wave of oil and gas sector bankruptcies.

Industry blamed the government for its withdrawal in Pennsylvania. “It’s clearly a regulatory uncertainty and that’s something the Pennsylvania industry is struggling with,” said Callahan of the Marcellus Shale Coalition.

Supporters of the LNG project directed their displeasure at the interest groups. “Three environmental groups in Pennsylvania gave Russian President Vladimir Putin a major victory,” State Senator Gene Yaw (R., Lycoming) wrote in an op-ed published Tuesday.

Last year, New Fortress turned its attention away from the Wyalusing project and began promoting a new strategy it calls “Fast LNG” — a plan to build modular gas liquefiers on offshore rigs that produce LNG and dock nearby Ocean ships can fill the platform.

New Fortress wants to build several Fast LNG plants that can be towed on site wherever there is offshore gas. They can be approved and built in half the time, at half the cost of an onshore facility and with “minimal” environmental impact, the company says.

“In my humble view, we don’t really have a gas shortage problem,” Wesley Edens, New Fortress’ CEO, told investment analysts on April 1. They have significant pipeline constraints.”

About 10 days after signing the agreement with Pennsylvania environmental groups to suspend the Wyalusing project, New Fortress submitted an 8,000-page application to the US Maritime Administration to build a Fast LNG operation off the coast of Louisiana. Earlier in March, it had announced plans to build a smaller LNG facility off the Congo coast with Eni SpA, an Italian oil producer.

The proposed Louisiana facility could produce up to 2.8 million tons of LNG per year, roughly equivalent to the capacity of the decommissioned Pennsylvania facility.

About Christine Geisler

Check Also

Production Size, Share, Trends, Business Insights and Analysis Growth Forecast to 2031 – SMU Daily Mustang

Rockville, USA May 15, 2022 (Smudailymustang) – The Offshore Pipelines market report aims to provide …