Europe’s Energy Crisis is Headed to ‘Panic,’ Says a Top Gas CEO. How the U.S. Can Help.
Toby Rice of EQT: "Europe is in an extremely bad spot."
Aaron M. Sprecher/Bloomberg
The European Union said Wednesday it wants countries to start rationing natural gas, potentially cutting off supplies to industrial companies or other users, to prepare for a possible shutoff of Russian gas exports. The plan highlights a “panic that Europe is feeling right now,” according to Toby Rice, the CEO of EQT EQT +4.32% , the top U.S. natural gas producer. Rice worries the situation could continue to get worse heading into the winter.
He said the crisis in Europe has galvanized political support for natural gas, both there and in the U.S. Natural gas powers factories and home-heating and is now the U.S.’s largest source of electricity. Natural gas is a fossil fuel, but it emits less carbon than coal and it has helped reduce overall carbon emissions in the U.S. as it replaces coal in power-generation.
Rice said that he’s seen growing approval from policymakers in the past few months for ramping up the use of gas to help solve the European energy crisis, and as a way to reduce carbon emissions by replacing coal. Earlier this month, Europe officially listed natural gas as a temporary part of its green energy plan, a controversial decision that cemented the role of gas in the early stages of the green transition. Rice, who is based in Pittsburgh, said he is also starting to hear more from the Biden administration, which had had a frostier relationship with producers earlier this year.
“There’s a lot more discussion and engagement from the administration,” he said. “And that alone is a signal that sentiment is changing.” On Wednesday, EQT (EQT) released a summary of a company-sponsored survey that it said showed nearly 70% of voters support more natural gas production.
EQT and other gas producers have had a very strong year as natural gas prices have soared, sending their shares soaring too. The U.S. is now the clear world leader in gas production, and is playing a key role in helping Europe wean itself off of Russian gas by sending more gas than ever to Europe in the form of liquefied natural gas (LNG). Its role has grown ever more crucial as Russia has threatened to reduce how much gas it sends to Europe. Already, skyrocketing prices have forced some European fertilizer-makers to shut down, because natural gas is a key input in some fertilizers. Rice thinks the worst could still be ahead for Europe, particularly if Russia reduces supply more. He thinks more factories would have to shut down as prices skyrocket.
“Let me be clear,” he said. “Europe is in an extremely bad spot. This is a crisis.”
U.S. LNG has helped Europe replenish its natural gas storage, but it’s still just 60% full, low for this time of year. After a brief lull, prices have jumped again, with gas trading at about $55 per million British Thermal Units in Europe, up from around $25 at the start of June, because of a shutdown at the key Freeport LNG plant in Texas. Natural gas trades around $7 in the U.S., because of the abundant supply of gas in the U.S.
Some U.S. policymakers, including Massachusetts Senator Ed Markey, have called for the U.S. to ban exports of natural gas to ensure prices stay low at home. Rice thinks that would be a major mistake, one he doubts will make it through Congress.
“The impacts of banning exports would be a death sentence for Europe,” he said. “It would be a win for Putin, and it would basically tighten the stranglehold that Russia has on Europe.”
Markey’s office did not respond to a request for comment.
In the short-term, U.S. exports are essentially capped by the logistical hurdles of sending natural gas overseas. LNG export facilities are running near full capacity, other than the curtailed supply from the Freeport LNG plant, which makes up about 15% of U.S. exports.
With more infrastructure, the U.S. could theoretically more than triple exports from current levels, while still keeping prices low domestically by ramping up overall drilling, Rice argues. That would require much more pipeline capacity and LNG export plants to deliver gas to consumers. Controversial pipelines like the stalled Mountain Valley Pipeline in Appalachia would have to be approved quickly, instead of sitting in legal or regulatory limbo for years, he argued.
LNG export plants now take five years to build, but Rice thinks they could be completed in two if approvals were expedited. There’s more than enough gas to solve multiple problems at once, he said.
“We have a 1.6-million acre leasehold position up here in Appalachia that has some of the highest quality, lowest cost, best environmentally responsibly-produced natural gas in the world,” he said. “And that acreage presents decades of drilling opportunities and decades of production that we can use to ramp up and support unleashed U.S. LNG exports.”
Ja, maak het maar als een commercieel issue, waarbij de U.S., mits het snel handelt, hier een slaatje uit kan slaan.
Over lijken gaan sommigen, meer wapens en munitie naar Oekraïne, zou ik zeggen.