Drilling Down

Rep. Johnson Pushes for LNG Exports to Europe

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YOUNGSTOWN, Ohio – The United States is the largest energy producer in the world, yet this country has failed to leverage these resources to our economic and political advantage when it comes to exporting to Europe. So says U.S. Rep. Bill Johnson, R-6 Ohio, who recently returned from a trip to that continent as the member of a delegation made up of his colleagues on the House Energy and Commerce Committee.

“The world – especially our friends and allies in Europe — is looking for America to lead on a political front, on an economic front, and on an energy front,” Johnson told The Business Journal in a telephone interview May 15.

Energy and politics are deeply intertwined in Europe, most notably in Ukraine, where Russia’s occupation of Crimea and its support of pro-Moscow rebels in the eastern part of the country has triggered sanctions from the United States and the European Union.

Johnson and his colleagues traveled to Belgium, Portugal, Ukraine and to Germany earlier this month. The trip lasted May 3 to 10.

Russia, with its abundance of natural gas and oil, “is holding a hammer over our friends and allies in Europe with its energy sources,” Johnson said. Much of the Russian economy is dependent on the sale of oil and gas through energy giant Gazprom to other European nations. But instead of imposing sanctions on Russia, the congressman asks, why doesn’t the United States increase the exports of its vast reservoirs of natural gas liquids, or NGLs, as an alternative source of energy for Europe?

“I’ve heard experts say that we’ve got more energy under our feet in the Marcellus and Utica shale plays than Saudi Arabia,” Johnson says. The abundance of NGLs in the United States makes the fuel a logical commodity to export to Europe, he said, which would simultaneously boost the economy of eastern Ohio.

Utica shale exploration, production and processing in eastern Ohio, for example, would experience a significant boost should the United States increase exports of natural gas liquids, Johnson said. Liquefied natural gas, or LNG, is the term for natural gas converted to liquid for storage or transport.

Meanwhile, such an end-run around Russia could squeeze its economy far more effectively than sanctions the European Union has imposed, the congressman said.

“It would have a tremendous impact,” Johnson declared. “You’re talking about thousands and thousands of jobs here at home, but also the geopolitical implications are staggering.”

Were the U.S. to export NGLs to Europe, it could depress the Russian economy by 30%, he said.

Johnson said the delegation met with Ukrainian Prime Minister Arseniy Yatsenyuk. During the meeting, the congressman asked the prime minister what it would take to halt Russian President Vladimir Putin’s aggression in Ukraine.

“He said, ‘Cut off the cash flow,’ ” Johnson said. “America is in a unique position to do that. We don’t need to put on more sanctions. All we’ve got to do is say we’re getting into liquid natural gas exports and take our rightful place as the most prolific energy producer in the world.”

He equates this policy to that of Ronald Reagan’s handling of the Soviet Union during the 1980s. The United States significantly increasing its spending on defense forced the Soviets to follow suit, which created additional stress to the Soviet economy before it imploded.

“We outperformed the Soviets and it drove them to bankruptcy,” Johnson said. “They could not sustain the system and we can do the same thing to Vladimir Putin today, and it doesn’t involve firing shots or declaring war.”

Johnson surmises that Putin isn’t interested in occupying or annexing all of Ukraine, pointing to the country’s agricultural significance. “He just doesn’t want anyone else to have it,” Johnson opined.

In January, Johnson introduced a bill intended to expedite the permitting process for U.S. companies that seek to export NGLs. That bill has cleared the House of Representatives while a companion bill is making its way through the Senate, the congressman said.

He optimistic that the Senate will pass its version and that President Obama would sign it.

Clearly, the target customer base is Eastern Europe, according to House Energy and Commerce Committee Chairman Fred Upton, R-Mich. “It will send the signal to our Eastern European friends that affordable U.S. gas will be an available alternative to Russian energy,” Upton said in January.

Upton accompanied Johnson on the European trip.

According a February 2015 report issued by the American Petroleum Institute, NGL exports could, by 2035, contribute as much as $10 billion to $31 billion each to natural gas-producing states such as Texas, Louisiana and Pennsylvania. Natural-gas producing states could see employment gains of 60,000 to 115,000 jobs, while non-gas producing states could see manufacturing sector job gains of 30,000 to 38,000 20 years hence.

“It’s a win for the hardworking people of Ohio and jobs created there,” Johnson said. “But it’s also a win for America’s foreign policy efforts as well, and our friends and allies across the globe.”

Published by The Business Journal, Youngstown, Ohio.