Bloomberg: The U.S. Energy Chief on Gas Exports, Russia, and the Keystone Pipeline

In a wide-ranging discussion with U.S. Secretary of Energy Ernest Moniz at Bloomberg’s Washington office on March 21, Moniz acknowledged what many observers have already deduced: U.S.-Russia relations are “under strain,” and yes, “everything in terms of the relationship is going to be reevaluated.”

Highlights from the conversation include three other areas:

Natural gas exports: Moniz was asked repeatedly whether the situation in Ukraine would expedite the administration’s plans to start exporting natural gas to Europe. The short and emphatic answer was no. The approval process remains the same, he said, and each of 24 pending applications to export liquified natural gas to non-free-trade countries will be evaluated as they would have been when Crimea was part of Ukraine. When pressed, Moniz did suggest that “maybe we will give some additional weight to the geopolitical criterion going forward.”

Don’t get too excited. This isn’t a switch that can be turned on overnight. Even if the government fast-tracked the process and approved every application tomorrow, the export projects are privately funded and require billions in capital investment and several years to complete. The furthest along, Sabine Pass, probably won’t begin exporting gas until the end of 2015. The bulk of U.S. LNG exports won’t hit the global market until 2018 and 2019 at the earliest.

One final point: While the U.S. can blunt Russia’s influence by exporting gas to Europe, greater opportunity lies in Asia. Natural gas there costs about $16 or $17 per thousand cubic feet, about 50 percent higher than in Europe, where it costs $11 per thousand cubic feet. What’s more, though natural gas is cheap in the U.S., after transportation costs are included the ability of U.S. exports to undercut Russian gas sold in Europe will probably be a matter of cents, not dollars.  MORE