New Book Declares “Golden Age” of American Natural Gas

Dr. Agnia Grigas discussed her latest book, The New Geopolitics of Natural Gas, earlier this week at a special book launch event hosted by the Atlantic Council in Washington, DC. She asserted that three factors have combined to create a new “golden age” for natural gas: the US shale gas revolution, the liquefied natural gas (LNG) boom and increased pipeline interconnections. Describing the significance of these developments, Dr. Grigas told the Atlantic Council audience:

“Let’s make no mistake about it: The United States is now an energy superpower.

“[The US] is now the largest natural gas producer in the world. It surpassed Russia in 2011… it is poised to become the 3rd largest LNG exporter by 2020. It is also, if you look at the oil markets, it is a rising and one of the leading producers of oil, rivalling Saudi Arabia, and the leading producer of petroleum products.”

Dr. Grigas also forecasts that natural gas will have a bright future under the Trump administration, commenting that new US policymakers are “very eager to leverage this American energy prowess.” She credits Energy Secretary Rick Perry with maturing the administration’s so-called “energy dominance” strategy as one that can assert influence and leverage in political matters around the world.

Explaining how US LNG exports to Latin America, Asia and Europe are affecting the world, Dr. Grigas described that international relationships are being reforged thanks to American natural gas exports. She pointed to recent shipments of US natural gas to Poland and Lithuania as evidence that US natural gas can penetrate the markets in northeastern Europe, where Russian companies like Gazprom have traditionally held monopolies on natural gas supplies.  These far-flung exports evoke distant memories of how US energy production has supported American global dominance in the last century:

“This is not solely or primarily about the U.S. economy or even American energy security. It really changes the balance of power in the world, and it changes particularly the balance of power in Eurasia. And if we look at kind of a historical comparison, if we look back now to the early 20th Century, we see how the United States emerged as an oil superpower, and it was that American oil production at the start of the 20th Century that really helped win World War I and World War II for America and its allies.”

With the expansion of natural gas production and exports, and improved infrastructure connecting purchasers worldwide, the United States is set to disrupt markets on multiple continents. The availability of US natural gas will force existing suppliers to compete on price. This, in turn, will loosen the monopolistic grip Russia has held on many European gas markets. In the past, Russia has bullied these countries – Ukraine, Lithuania, Estonia and Latvia in particular – by imposing high gas prices whenever the governments of those countries have made decisions that were politically unpopular with the Kremlin.

The Russians have long feared this moment, and they have tried to subvert it by opposing the use of hydraulic fracturing in the United States. Several members of Congress have asked for a formal investigation into Russian meddling in US energy production and allegations that the Kremlin has funded “Keep it in the Ground” protest movements in the United States.

Dr. Grigas began researching and writing this title in 2014, just as the American shale revolution was truly taking root. “The initial ideas and optimism that I had with this book really have been met in full,” Grigas said. “I think our greatest expectations have been exceeded.”

The shale gas revolution surely has blown away many initial expectations for how it would transform the US into an energy superpower. Few predicted that the US would begin exporting LNG just two years later, but in 2016 Cheniere Energy accomplished that feat, sending out shipments from its Sabine Pass LNG facility in Louisiana. Charif Souki, the former Cheniere CEO and founder of Tellurian Energy, positively reviewed The New Geopolitics of Natural Gas:

“At a time when the natural gas business is experiencing fundamental changes and becoming increasingly a global industry, this book provides a comprehensive understanding of all the relationships that have driven the business to where it is today. It also provides the foundation for understanding the future evolution of the industry.”

Dr. Grigas has also become a media fixture thanks to her diligent research and scholarship on energy and geopolitics. In a recent guest column for Reuters, she wrote that LNG trade opportunities with the major Asian economies of China, Japan, South Korea and India are high priorities for those governments and the Trump administration alike.  The implications, she writes, could be transformative.

The US is set to utilize its LNG dominance as it reshapes its trade relationships in Asia, she explained. President Trump is hoping to shift the trade imbalance that has long been unfavorable to the United States, and the attraction of LNG could give his administration the necessary weight to shift the scales. With American LNG on the scene, Asian markets will finally have a tool to “foster competition with Moscow, which has been planning to build gas pipelines and/or boost LNG deliveries to China, Japan, Korea, and India,” writes Dr. Grigas.

On the whole, America’s golden age of natural gas is likely to reinforce the status of the United States as the world’s leading geopolitical superpower. Many countries in Europe will benefit from having a friendly nation and NATO ally take on a new role as an energy supplier for the continent, allowing those countries to diversify away from more hostile providers. Meanwhile in Asia, economic development will prosper thanks to increased energy competition. And because of those new trends in energy markets, the natural gas sector will continue to thrive and support tens of thousands of jobs here at home.

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