Webinar: Many Factors at Play in Global Energy Crunch
The Russian invasion of Ukraine has resulted in energy supply issues both in the U.S. and abroad, as Russian exports of oil and gas have been severely limited by sanctions and a U.S. ban.
Dan Weaver, president and executive director of the Pennsylvania Independent Oil & Gas Association, gave his assessment of the situation and how the U.S., and specifically the Appalachian natural gas region, might be able to help address it during the Center for Energy Policy’s recent webinar on the energy implications of the Russia-Ukraine crisis. Weaver leads the state’s largest and oldest oil and gas trade association representing the full industry.
Russia is the largest natural gas-exporting country in the world, and the second-largest crude oil and condensates-exporting country after Saudi Arabia, according to the Energy Information Agency. A significant amount of those exports go to Europe. Of Russia’s total energy exports, 74 percent of its natural gas, 49 percent of its oil, and 32 percent of its coal, goes to the European Union.
“This is what makes them very vulnerable to what is going on,” Weaver explained, showing a chart that gives the energy dependency rate of each European country. “A lot of these countries are more than 50 percent dependent.”
“Russia has basically weaponized its natural gas supply,” Weaver said, adding that the effects will also be felt in fertilizer production, which uses natural gas as a raw material, and ultimately in food production.
The U.S., in contrast, imports just 11 percent of its oil from Russia and has other options to make up that supply, he said. While oil and natural gas prices are spiking, the U.S. is in a better position.
Weaver said that domestic policies aimed at fighting climate change have contributed to constraints on U.S. production of oil and natural gas, as tougher rules on emissions and permitting make companies less likely to increase production. That was already contributing to higher domestic prices for oil and gas as demand increased in the economic reopening following COVID-19 lockdowns.
Weaver noted that the U.S. at the start of 2022 became the largest exporter of liquefied natural gas in the world, and “a lot of LNG is heading toward Europe.” President Biden announced last week a joint effort to cut Europe’s reliance on Russian natural gas and to provide more U.S. LNG to Europe. The U.S. initially plans to send 15 billion cubic meters of additional LNG there this year, and to expand European imports of U.S. LNG to 50 billion cubic meters by 2030, meeting about one-third of the need.
However, U.S. LNG exporting facilities are running at just about capacity already and more infrastructure, including pipelines to get Appalachian gas to processing facilities in the east and south and more LNG terminals, is needed.
“It’s not instantaneous,” Weaver said. “They can’t just push a button,” to increase production.
Weaver said the future of energy security will depend largely on the policies that are put in place, and if they can help producers increase production and reduce the regulatory burden.
To view the full webinar, click here.