This is the first of a four-part series of commentaries discussing the significance of President Joe Biden’s decision “to pause further action on new LNG export permits." The decision "sent shockwaves through the industry,” according to the authoritative commentator RBN Energy; it also opens up opportunity for Canada.It is deeply ironic that it was the Obama administration which first allowed the export of oil, as the US became the largest oil producer in the world. Now, under President Joe Biden, it has also become the largest natural gas producer and contributor to the growing global LNG market.But, not everyone is happy. And as Biden attempts to please his fringe, currently unhappy with the recent approval of the Alaska Willow oil project, the LNG pause — a move the Cato Institute called “impulsive and destructive” — might still not be enough to settle them down.It is worth emphasizing the obvious. The US is now the world's energy powerhouse and natural gas is becoming an ever more vital component of the global energy complex. Given Russian gas is mostly no longer available, LNG supply from the US has become critical to European countries, especially Germany.One might see this as a great accomplishment, especially for a country that only a few decades ago was importing both oil and natural gas. But many take a dim view of natural gas because it is still a fossil fuel. In other words, LNG is at the heart of the great political divide In North America — and beyond.All Biden has ever done is politics, meaning it would hardly be a surprise if the LNG pause is merely a political maneuver, destined to be removed after the election. Energy Secretary Jennifer Granholm, in the publication Energy Intelligence, reminds us that “this is not unprecedented,” perhaps signaling the future. She refers to a Department of Energy (DOE) 2018 study of the impact of LNG on domestic markets. The industry publication further suggested a behind the scenes “tussle” as “longtime career DOE staff” who understand the role of natural gas as a “transition fuel and the support of allies in Europe,” do not appreciate this White House political initiative.North America, now the largest producing area in the world, has long been a natural gas island. It was only a few decades ago that the US was dependent on imports as gas production was in decline. The horizontal multi-frac revolution (HMF) in this innovative industry has fostered dramatic growth — US capacity has now reached 105 billion cubic feet per day (bcfpd).In addition to the growing importance of oil sands in Canada, natural gas was once the bread and butter of the energy sector in Alberta with a record 13,268 wells in 2005 and another 1,000 in BC. Since then, there has been an evolution from conventional deposits (hard to find, easy to produce) to unconventional (easy to find, hard to produce.) This is the result of HMF.With nowhere to go, natural gas production in Canada languished until recently increasing to 18 to 19 bcfpd in anticipation of the LNG Canada pipeline to the Pacific. This places Canada among the top producers, of which between four and six BCFD is currently exported by pipeline to the US. Within a few years Canada should be exporting about five BCFD of LNG.LNG — liquefied natural gas — is just the product of compressing and cooling gas. In this liquid form, it is transportable in specialised tankers to parts of the world unconnected to North America or other producers by pipelines. Infrastructure and investment heavy, it requires facilities to cool and compress gas into a liquid at minus 260 degrees Fahrenheit and loading facilities for transit. Likewise, at the destination, regasification facilities and pipelines to end users require regulatory approval, investment, construction and time.Still, global LNG connects 20 exporters to 48 markets and is growing rapidly. Major players include Qatar, Australia, Russia and soon Canada.As a fossil fuel, natural gas emits greenhouse gases, but about half that of coal. It is an effective twin for intermittent renewables — solar and wind. Replacing coal with gas for much its electrical generation has made the US the only significant industrial country to reduce emissions since the first climate gabfest in Kyoto decades ago.But even so, the natural gas option presents an irreconcilable dilemma for hard-core believers of a climate crisis. Unlike much of the undeveloped world, more motivated towards the prosperity we enjoy, the developed world activists insist there is a global emissions problem. Yet, reducing emissions by replacing coal in Asia with LNG from Canada or the US is not acceptable to them, even with the knowledge that our strict environmental regulations, versus other sources, further benefit the planet.For the activists the global problem must be solved locally. They need to satisfy their feelings and see evidence of their superiority by saving the planet. These emotions seem to be more important than facts and substantive progress elsewhere in the world.The commentaries which follow will further explain the LNG pause, discuss consequences in both Canada and the US, and further address the Biden press release. The second appears on Thursday 28th March
This is the first of a four-part series of commentaries discussing the significance of President Joe Biden’s decision “to pause further action on new LNG export permits." The decision "sent shockwaves through the industry,” according to the authoritative commentator RBN Energy; it also opens up opportunity for Canada.It is deeply ironic that it was the Obama administration which first allowed the export of oil, as the US became the largest oil producer in the world. Now, under President Joe Biden, it has also become the largest natural gas producer and contributor to the growing global LNG market.But, not everyone is happy. And as Biden attempts to please his fringe, currently unhappy with the recent approval of the Alaska Willow oil project, the LNG pause — a move the Cato Institute called “impulsive and destructive” — might still not be enough to settle them down.It is worth emphasizing the obvious. The US is now the world's energy powerhouse and natural gas is becoming an ever more vital component of the global energy complex. Given Russian gas is mostly no longer available, LNG supply from the US has become critical to European countries, especially Germany.One might see this as a great accomplishment, especially for a country that only a few decades ago was importing both oil and natural gas. But many take a dim view of natural gas because it is still a fossil fuel. In other words, LNG is at the heart of the great political divide In North America — and beyond.All Biden has ever done is politics, meaning it would hardly be a surprise if the LNG pause is merely a political maneuver, destined to be removed after the election. Energy Secretary Jennifer Granholm, in the publication Energy Intelligence, reminds us that “this is not unprecedented,” perhaps signaling the future. She refers to a Department of Energy (DOE) 2018 study of the impact of LNG on domestic markets. The industry publication further suggested a behind the scenes “tussle” as “longtime career DOE staff” who understand the role of natural gas as a “transition fuel and the support of allies in Europe,” do not appreciate this White House political initiative.North America, now the largest producing area in the world, has long been a natural gas island. It was only a few decades ago that the US was dependent on imports as gas production was in decline. The horizontal multi-frac revolution (HMF) in this innovative industry has fostered dramatic growth — US capacity has now reached 105 billion cubic feet per day (bcfpd).In addition to the growing importance of oil sands in Canada, natural gas was once the bread and butter of the energy sector in Alberta with a record 13,268 wells in 2005 and another 1,000 in BC. Since then, there has been an evolution from conventional deposits (hard to find, easy to produce) to unconventional (easy to find, hard to produce.) This is the result of HMF.With nowhere to go, natural gas production in Canada languished until recently increasing to 18 to 19 bcfpd in anticipation of the LNG Canada pipeline to the Pacific. This places Canada among the top producers, of which between four and six BCFD is currently exported by pipeline to the US. Within a few years Canada should be exporting about five BCFD of LNG.LNG — liquefied natural gas — is just the product of compressing and cooling gas. In this liquid form, it is transportable in specialised tankers to parts of the world unconnected to North America or other producers by pipelines. Infrastructure and investment heavy, it requires facilities to cool and compress gas into a liquid at minus 260 degrees Fahrenheit and loading facilities for transit. Likewise, at the destination, regasification facilities and pipelines to end users require regulatory approval, investment, construction and time.Still, global LNG connects 20 exporters to 48 markets and is growing rapidly. Major players include Qatar, Australia, Russia and soon Canada.As a fossil fuel, natural gas emits greenhouse gases, but about half that of coal. It is an effective twin for intermittent renewables — solar and wind. Replacing coal with gas for much its electrical generation has made the US the only significant industrial country to reduce emissions since the first climate gabfest in Kyoto decades ago.But even so, the natural gas option presents an irreconcilable dilemma for hard-core believers of a climate crisis. Unlike much of the undeveloped world, more motivated towards the prosperity we enjoy, the developed world activists insist there is a global emissions problem. Yet, reducing emissions by replacing coal in Asia with LNG from Canada or the US is not acceptable to them, even with the knowledge that our strict environmental regulations, versus other sources, further benefit the planet.For the activists the global problem must be solved locally. They need to satisfy their feelings and see evidence of their superiority by saving the planet. These emotions seem to be more important than facts and substantive progress elsewhere in the world.The commentaries which follow will further explain the LNG pause, discuss consequences in both Canada and the US, and further address the Biden press release. The second appears on Thursday 28th March
