LNG:

Ukraine crisis accelerates Capitol Hill push for more exports, sparks jockeying in key Senate race

Top Democrats and Republicans keen on seeing the United States export its newfound glut of natural gas -- and tap into regional benefits -- are seizing on the conflict in Ukraine to push the Obama administration to fast-track exports to U.S. allies.

Some lawmakers may also be motivated by domestic politics. For example, Sen. Mark Udall (D-Colo.) and his likely Republican challenger, Rep. Cory Gardner, are pushing dueling proposals.

Udall yesterday introduced legislation to fast-track gas exports to World Trade Organization members. Rep. Michael Turner (R-Ohio) introduced similar legislation, H.R. 4139. Adding to the mix, Rep. Ted Poe (R-Texas) yesterday unveiled a measure that would fast-track the Department of Energy's approval of exports to Ukraine, Soviet nations and members of the European Union.

Not to be outdone, Gardner, the leading Republican running against Udall, will introduce liquefied natural gas export legislation of his own today, though his office would not release details last night.

"Natural gas means jobs in Colorado and energy independence for America," Gardner said in a statement. "It also serves our national security interests as an aggressive Russian regime looks to expand power in former Soviet Union countries. By acting to speed up export approvals, we can help our allies in the region and across the globe while creating jobs and economic opportunity here in Colorado."

The sudden political focus on global energy markets stems from concerns that Russia will use the leverage it holds over Ukraine and other countries through its large-scale oil and gas exports. Russia in the past has cut off supplies to gas-dependent Ukraine and Europe.

The crisis has piqued ongoing arguments on Capitol Hill that exporting the country's current daily supply of 86.48 billion cubic feet of gas to energy-hungry allies and neighbors like Ukraine, Japan and India currently hinges on lengthy federal permitting and trade agreements.

The Coloradans aren't alone in flagging the Ukraine crisis to push LNG exports -- all of which are currently only paper proposals from facilities cropping up along the Gulf of Mexico and Atlantic coasts.

Senate Energy and Natural Resources Chairwoman Mary Landrieu (D), a public supporter of exports from her home state of Louisiana, told reporters yesterday that she plans to raise the issue with the White House.

"It's clear that a lot of the conflict and economic stress in Europe and the surrounding region is energy-related," Landrieu said. "That's why I've been a fairly strong advocate" for increasing the pace of exports even before becoming chairwoman, she added.

DOE's move

Senate Energy and Natural Resources Committee ranking member Lisa Murkowski (R-Alaska) said Ukraine's struggle highlights the conflict the country's allies face. And on the flip side, the United States needs to recognize its own strategic position as a major energy player in light of the country's oil and gas revolution -- and the national leverage gained through international sales, she added.

"I think it speaks to the bigger question, which is you've got a situation over in Ukraine right now where Russia, as a nation, has been basically using their energy resources for political leverage," Murkowski said. "And not only Ukraine, Europe feels it, so when we -- whether we're dealing with an immediate crisis like we're seeing unfold in Ukraine, or whether we're just thinking long-term -- I think we need to know you will have nations that will use their energy assets as strategic assets."

The message falls in line with a continuous GOP drumbeat to open the doors to energy exports.

Sens. John Barrasso (R-Wyo.) and James Inhofe (R-Okla.) have called for accelerated LNG sales abroad to help nations in Europe, including Ukraine, free themselves from Russian "manipulation." On the House side, Speaker John Boehner (R-Ohio) and House Energy and Commerce Chairman Fred Upton (R-Mich.) have flagged Ukraine's plight as a result of the administration's excruciatingly slow approval process, calling it a "de facto ban" on approving U.S. gas exports, a misstep they said Putin has "happily exploited to finance his geopolitical goals."

But the White House so far has turned to energy reforms -- not exports -- to undercut Russia's ability to use natural gas as a weapon.

The administration earlier this week launched a diplomatic push, unveiling a $1 billion economic package to support the Eastern European country in energy security, energy efficiency and energy sector reform. Bill Gibbons, a spokesman for DOE, said the energy-related reforms will help Ukraine's government take steps to restore its economic stability and growth and reduce Ukrainian dependence on imported Russian gas.

"Regarding specific Energy Department actions on LNG exports, the department remains committed to an expeditious and responsible process," he said in an email. "We continue to make public interest determinations on a case-by-case basis, carefully considering economic, energy security, environmental and geopolitical impacts, among other factors."

The manufacturing sector has cautioned DOE against moving too quickly and has touted the benefits of using cheap gas domestically. An industry group, America's Energy Advantage, which includes Dow Chemical, said exporting LNG to Ukraine is a "false hope" and the United States won't have an LNG export facility up and running until 2017.

The Industrial Energy Consumers of America agreed. The group in a letter to Upton yesterday suggested that the United States export its hydraulic fracturing technology -- as opposed to gas exports -- to help Ukraine tap into more than 40 trillion cubic feet of technically recoverable natural gas.

"Teaching a man to fish is always better than giving him a fish," Paul Cicio, the group's president, said in a statement.

'Natural gas diplomacy'

Whether LNG exports will play a role in legislation firming up in the Senate in response to the Russian crisis is unclear.

What's not unclear is the bipartisan push for such a move.

Senate Foreign Relations Chairman Robert Menendez (D-N.J.) said earlier this week his committee was working on crafting a bipartisan package to provide critical support to Ukraine. The measure, he said, would align with the Obama administration's efforts and authorize funds to provide at least $1 billion in loan guarantees to provide structural support to Ukraine's economy, as well as technical assistance for energy reforms.

Sen. Mark Begich (D-Alaska), who has co-sponsored previous bills to expedite LNG exports to NATO allies and Japan, said the situation in Ukraine has heightened interest in the issue.

"We're working on something right now to accelerate this issue a little bit higher, because we think ... the moment is in front of us," he told reporters yesterday. "There's no question about gas in this country -- especially from Alaska -- that we have capacity, and we should take advantage of this and use it as an international tool that could help create allies but also help make sure Russia isn't just running amok out there."

Begich declined to provide details on his legislation but said it would be released very soon. At that point, he said, he plans to reach out to Menendez about including his ideas in the Foreign Relations Committee's bill. Separately, House Appropriations Chairman Hal Rogers (R-Ky.) and Rep. Nita Lowey (D-N.Y.), the ranking member, introduced a measure, H.R. 4152, yesterday that would provide Ukraine with loan guarantees, but energy issues were not mentioned.

Last year, 11 bipartisan senators, including Begich and Barrasso, joined House Republicans in unveiling legislation to spur exports of liquefied natural gas to Japan and other U.S. allies (E&E Daily, Feb. 6). The measures would have required DOE to approve exports to any country if the State and Defense secretaries determine they would bolster national security.

Exactly what influence those measures will have on DOE remains unclear. The agency during the past 3 ½ years has approved six applications to export LNG to countries without a free-trade agreement with the United States, and is reviewing an additional two dozen.

Paul Bledsoe, a fellow with the German Marshall Fund and a former Clinton White House aide, said during an interview that the basic notion is that the United States should consider using the natural gas boom as a geostrategic asset in its relationships with close allies and Europe.

Bledsoe and Lee Feinstein, a former senior official in the Obama and Clinton administrations, in an opinion piece yesterday for Reuters, called on Obama to use the authority of the presidency to direct DOE to speed LNG export approvals to U.S. allies while rolling out targeted sanctions against Russia.

Bledsoe said tapping into U.S. gas has the potential to bolster allied countries' economies and reduce global carbon emissions. "U.S. natural gas diplomacy should not simply be about the immediate Ukrainian crisis, but more broadly aimed at preventing intimidation of European allies in the future," he said.

And then there's the question of action on Capitol Hill.

Senate Majority Whip Dick Durbin (D-Ill.) said Russia has exploited oil and gas production to extort its neighbors, and said he hoped Congress would act to fast-track LNG exports.

"But, you know, you're talking about substantive action by the Senate, which is rare," he said.

Reporter Elana Schor contributed.

Twitter: @HMNorthey | Email: hnorthey@eenews.net

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