As the west scrambles for a geopolitical response to Russia’s play for the Crimean peninsula, advocates for the oil and gas industry have used the situation to redouble the push to export liquefied natural gas (LNG). Framing the issue as a matter of protecting a fledgling democracy and ensuring security for United States allies, oil- and gas-affiliated pundits, lobbyists, and politicians have begun banging the drum to increase gas exports as a way for the United States to win this standoff with its Cold War rival. However, approving more LNG export facilities is unlikely to have any effect on the current crisis as construction of terminals will take years and billions of dollars and there is no way to ensure that gas will go to Ukraine or any European country when it fetches a higher price in Asia.
Though increased gas exports would not likely score the US a geopolitical win in Crimea, it would help the oil and gas industry to increase their bottom line by selling natural gas, which is currently barely profitable to drill for, to high-priced Asian markets.
As Republic Report’s Lee Fang showed, many in the commentariat calling for exports as a solution have ties to oil and gas lobbying groups and Koch-funded think tanks. We wrote last week on former New Mexico Governor Bill Richardson, who penned an op-ed arguing to use LNG to “[secure] regional independence from Russia,” without disclosing that his employer had been employed as recently as December as a consultant to Ukraine on an LNG project.
Members of Congress have also been speaking out on the issue and have introduced several bills in the House and Senate to expedite Department of Energy approval of LNG export permits. We found that some of the legislators most vocal about LNG and Ukraine have been the recipients of large amounts of campaign cash from the oil and gas industry – the five profiled below have brought in more than $1.5 million since 2009.
“Natural gas has created a job boom across this country, but exporting also has the potential to strengthen relationships with certain of our allies who are still at the mercy of Russia’s virtual energy monopoly,”
– Sen. David Vitter (R-La.), March 6, 2014
Senator Vitter‘s state is home to the first LNG export terminal to receive regulatory approval in the lower 48 states – Cheniere Energy‘s Sabine Pass facility. According to the Center for Responsive Politics, Vitter has received $605,950 from oil and gas industry individuals and PACs since 2009. Oil and gas is Vitter’s biggest industry donor by more than 30%.
Vitter is the son of a Chevron executive, which probably explains why his stock portfolio includes a large chunk of Chevron stock, worth $380,000 to $850,000 according to his 2012 disclosures. He also owns some stock in GE ($50,001-$100,000) and ExxonMobil ($1,001-$15,000), bringing his oil and gas investments to 74% of his assets. ExxonMobil and GE are both invested in LNG export projects awaiting approval by US regulators.
“As long as Ukraine and our NATO allies are overly dependent on Russian gas, Vladimir Putin will be able to hold them and their economies hostage. Congress should respond by giving Ukraine as well as our NATO allies an alternative supply of natural gas.”
– John Barrasso (R-Wyo.), March 10, 2014
John Barrasso attempted to tie two amendments requiring the DOE to approve permits to export LNG to an aid package to Ukraine that were blocked by the Senate Foreign Relations Committee. Barrasso said that blocking the amendments “rewards Russia” and “compromises Ukraine and allies,” in a press release. Barrasso’s state of Wyoming is home to significant oil and gas operations and the industry is the senator’s second largest donor, contributing $367,366 since 2009.
“We need to work with Ukraine and the European Union to forge a long-term and short-term strategy that includes…an energy plan that helps the people of Ukraine and the European Union become more energy secure and less dependent on Russian energy.”
– John Hoeven (R-N.D.), March 18, 2014
With Virginia Senator Mark Warner, John Hoeven called on President Obama require the DOE to approve pending LNG export permits within 60 days and expand the group of nations that qualify for US energy exports. Hoeven has received $293,237 in campaign contributions from the oil and gas industry, his largest donor, since 2009.
During a press conference held by a group of senators who visited Ukraine, Hoeven’s pitch for US LNG exports was telling of the financial motives that seem to underlie the anti-Putin rhetoric: “We’re producing more natural gas every day. We’re flaring it off. We need markets. What better way than to start bringing some of that LNG, liquefied natural gas, over here and putting some real pressure, in an economic sense, on Russia and helping Ukraine and the EU, which right now depend on Russia for so much of their energy.”
Like Sen. Vitter, Hoeven also has holdings in oil and gas companies, particularly in publicly traded upstream and midstream master limited partnerships. In his 2012 financial disclosure, Hoeven disclosed between $190,008 and $503,000 in equity (about 3% of his $15.2 to $65 million in assets) in various oil and gas companies, including Energy Transfer Partners, EV Energy Partners LP, and Copano Energy (since bought out by Kinder Morgan, a partner with GE in the Gulf LNG Liquefaction Project currently before the DOE). These holdings earned Hoeven between $21,382 and $24,479 in that year.
“The ongoing crisis in Ukraine — and Russia’s threat to use its natural gas exports as a cudgel there — shows why we need to responsibly develop our natural gas reserves and expand our ability to export this resource abroad.”
– Sen. Mark Udall (D-Co.), March 5, 2014<
The pro-LNG chorus on Capitol Hill spans both major political parties. Mark Udall, a Democratic senator from Colorado, introduced a bill to expedite approval for LNG exports to all World Trade Organization (WTO) member countries called the American Job Creation and Strategic Alliances LNG Act.
Since 2009, Udall has brought in $197,050 from individuals and PACs associated with the oil and gas industry. He is ranked 12th in the Senate for oil and gas contributions in the 2013-2014 cycle, with $85,950 so far.
“We have already approved six of these permits. This is going to send a major economic signal that Russia’s ability to dominate the energy market in Europe is going to come to an end.”
– Mark Warner (D-Va.), March 18, 2014
Another Democrat, Virginia Senator Mark Warner partnered with John Hoeven on the bipartisan proposal to expedite LNG export permits described above. Richmond, the capital of Warner’s state of Virginia, is home to the headquarters of Dominion Resources, owner the Cove Point LNG Project, which was approved to export LNG by DOE in September 2013 and which is still awaiting Federal Energy Regulatory Commission (FERC) approval to begin construction. Dominion has been Warner’s second biggest donor since 2009, with contributions totaling $74,770. As the Richmond Times-Dispatch noted, Warner recently appointed a former Dominion executive vice president chair of his re-election campaign.
Another major Warner donor, the Blackstone Group, is heavily invested in LNG exports, especially Cheniere’s Sabine Pass facility. Blackstone has given $63,500 to Warner since 2009.
These are just some of the many legislators in both houses of Congress who have used the instability in Ukraine and Crimea as a platform to advocate for expanding natural gas exports despite the fact that expediting permit approval is unlikely to have any impact on Russia’s sway over the region. Are US lawmakers who are on the receiving end of millions in industry largess taking advantage of the situation in Ukraine to push the interests of their big donors and, in the case of lawmakers who actually own stock in oil and gas companies, their own financial interests?