Energy Security? What’s That?


In reading through this issue of SHALE Magazine, you will notice a heavy focus on events surrounding Russia’s war on Ukraine. That was not our plan for this issue when the year began, but everyone has a plan and they tend to fall apart as soon as the first punch is thrown, as Mike Tyson would say.

Vladimir Putin threw that first punch in early March, sending a large portion of his country’s army into a neighboring country in pursuit of annexing territory and settling some very old grudges. He was motivated largely by the belief that his country’s energy dominance over Europe would provide him the geopolitical leverage he would need to sustain his war until it reached a successful conclusion. The consequences to the world — including the United States — have been several and severe, and all have had the effect of highlighting the crucial importance of building and maintaining a nation’s energy security.

We should all remember that Europe’s countries willingly allowed themselves to become client states of Russia where energy is concerned by effectively making hydraulic fracturing and drilling for their own oil and natural gas resources illegal during the first decade of this century. I was lectured by a European oil trader when I pointed that out during a recent panel discussion, who told me that “fracking was not competitive in Europe” during that time.

Well, certainly, fracking and drilling in Germany in, say, 2005 was not price-competitive with contracting to bring cheap natural gas from Russia into that country when viewed on an isolated monetary basis, without considering other factors. Factors like, for instance, Vladimir Putin deciding he could forcibly annex big chunks of Ukraine 17 years later, safe in the knowledge that Germany and the rest of Europe would help him finance his war because they could not cut off those Russian oil and gas imports without destroying their own economies and throwing the world into an economic depression.

How do we measure the cost of this action, and all the human lives that have been taken and destroyed, and decide whether or not fracking and drilling Germany’s own resources, thus providing Germany with a higher level of energy security, would in hindsight be “competitive” with the cost of becoming a Russian vassal state where energy is concerned?

In Poland on March 25, President Biden stood at a press conference with European Commission leader Ursula von der Leyen and committed America’s liquified natural gas (LNG) industry to quadruple its exports to Europe over the next 8 years. Indeed, during its energy crisis over the winter, Europe relied heavily on LNG imports from the U.S. and Qatar to keep the lights on and homes heated. But the cost of that LNG was often 10 times higher than the price those countries pay for the natural gas coming in from Russia.

Would fracking and drilling for Germany’s own resources be price competitive with $30 per mcf LNG? You bet it would. So, we see the short-sighted decisions made by European leaders from 10 and 15 and 20 years ago now coming back to haunt the continent, as they provide a madman in the Kremlin the confidence to mount a tragic war on a neighboring country.

What is the value of a nation’s energy security? As Tom Pyle, Karr Ingham and others point out in this issue, America could be about to find out the hard way unless the Biden administration wakes up to reality and decides to change course.

The “Green New Deal” policies that Biden and this Democrat-dominated Congress have pursued for the last 15 months basically represent a carbon copy of the sad and tragic road traveled by European governments since 2001. The president continued with another move designed to diminish U.S. energy security on March 31.

On March 31, Biden announced a plan to remove 180 million barrels from the SPR over the following 180 days. That’s 30% of the 635 or so million barrels that remain in the Reserve after his previous removal of 50 million barrels began last November.

In the wake of the first Arab Oil Embargo in 1973, the federal government, in its infinite wisdom, realized that having a massive reserve of crude oil to be able to tap in times of national emergency might be a good idea. President Richard Nixon and the Democrat-dominated Congress at the time thus showed they understood the strategic value of maintaining America’s energy security.

There is no doubt that $4.20 gasoline prices are not pleasant, but do they really represent a national emergency? Please. What high gas prices represent to Biden and his fellow Democrats is a political problem they are desperate to somehow mitigate. They understand that the party in power will be blamed for the price of gasoline at the polls come November by voters who are angry that the low gas prices Donald Trump handed to them have been intentionally surrendered by his successor in office. That’s the motivation for this move, and nothing more.

It is as if this ship of fools in D.C. have learned nothing from Russia’s war on Ukraine. Putin would have never attacked Ukraine were it not for the geopolitical leverage he held over the European continent, thanks to its conscious decision to become client states of Russia where oil and natural gas are concerned. He knew that these subservient nations would help fund his war because they would not be able to do without his energy exports or find adequate replacements for them in short order. Every action the Biden presidency has taken related to energy has been designed to move the U.S. down the same sorry energy road that Europe has trod in this century. Diminishing the SPR by another 30% only takes us further down the road to energy subservience.

Back to Biden’s committing the U.S. LNG industry to quadruple deliveries to Europe in just eight years. In the days following that announcement, I spoke with an array of contacts in that industry, all of whom told me their companies had absolutely no idea the president was about to make that deal. The administration did not reach out to a single major player in the domestic LNG industry to see if their companies would be able to fulfill such a deal.

It also quickly became obvious after the announcement that the Biden administration has no intention of doing anything to help facilitate the meeting of that goal. In fact, it’s obvious they plan to redouble their efforts to deny permits and capital the industry needs to achieve the major infrastructure expansion that would be required to do so.

What does that tell us? It tells us that Biden’s deal with the EC was just a virtue signal designed to convince the ignorant among us he was doing something to help Europe solve its own energy security crisis. Nothing more.

We know where this all ends. We’re seeing it play out in real-time in Ukraine right now, today. Yet, it is as if the Democrats in Washington see none of it, or if they do, they simply don’t care. About the author: David Blackmon is the Editor of SHALE Oil & Gas Business Magazine. He previously spent 37 years in the oil and natural gas industry in a variety of roles — the last 22 years engaging in public policy issues at the state and national levels. Contact David Blackmon at [email protected].


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