Gulf Coast gas export frenzy raises tough questions for U.S., Europe

The single mother of six saw her Section 8 rental home wrecked in 2020 by Hurricane Laura. Months after the family tried to move back in, living under a tarp and using a piece of plywood to cover the gaping hole where the back door had been, Hurricane Delta filled the place with water. Ozane’s family is now living in a Federal Emergency Management Agency trailer.

“People are getting tired of this,” said Ozane, a local community organizer. “They are going to the hearings for these facilities and using the words ‘climate change.’ They’re realizing we’ve had four federally declared natural disasters in the last two years. That’s unheard of.” National environmental groups are joining the fight against permits for liquefied natural gas (LNG) terminals they had earlier considered futile to challenge.

With European countries desperate to replace fuel supplied by Russia, U.S. energy companies are plotting an immense expansion of their ability to produce and export liquefied natural gas. But while a building frenzy of gas exporting infrastructure is contemplated in this industrial region straddling Louisiana and Texas, not everyone is embracing the prospect. Even the European countries so desperate for non-Russian energy seem wary of committing to the United States’ LNG experiment.

The scope of the energy companies’ plans was clear on a recent media day at Cheniere Energy’s Sabine Pass liquefaction facility, where company officials showcased how natural gas piped in from as far away as Canada is frozen to minus-265 degrees, pumped into towering tankers triple the size of a football field and shipped thousands of miles away.

An “infinite” number of investors are lining up to fund more exports from the Gulf Coast, Anatol Feygin, a Cheniere executive vice president, said at the event. “There are some institutions that have exited the hydrocarbon business, but for every one of those, there are 50 that will ensure that high-quality projects like ours are very attractive with finance,” he said.

It all comes with a heavy footprint. Not just on the local landscape — the expanse of concrete, steel and valves is the size of a small city — but also on the climate.

Soaring prices in Europe are propelling the LNG expansion frenzy. Three more terminal projects have begun construction along the Gulf Coast and are expected to be completed by 2026, with capacity to grow deliveries of gas overseas by more than half, according to state and federal data. Another 10 projects have received a green light from the federal government. The companies holding those permits are now scrambling to find LNG buyers willing to lock into the long-term contracts needed to make the projects financially viable. Behind those are nine more project proposals currently in the permitting process.

“The outlooks for LNG demand growth are really quite robust going deep into the 2040s, even to the 2050s,” said Dustin Meyer, vice president for national gas markets at the American Petroleum Institute.

But behind the industry enthusiasm for capitalizing on Russia’s isolation are tough questions about the enduring impact — at home and abroad — of altering the course of the global energy supply.

Regardless of how much new gas ultimately comes online, very little of it will help Europe now, when countries on the continent are desperate to unshackle themselves from Russian energy. Most of the new supply the industry envisions is several years away from shipping, and the decades-long contracts gas companies need to fund their expansion plans would have to extend far beyond when the European Union anticipates needing the gas. Most of the LNG created by the industry’s vision ultimately will likely go to China.

“Europe does not want this gas for very long, and it is scared of getting locked in,” said Jason Bordoff, founding director of the Center on Global Energy Policy at Columbia University.

After Ukraine was invaded, the European Union set a deadline of shutting off the spigots from Russia altogether by 2027. The bloc’s deadlines for drastically reducing all natural gas consumption — a pillar of climate action — arrive soon after.

In the United States, it is in that context that contentious debate and, among Democrats, intraparty political feuds are erupting over the question of how American gas exports fit into the broader energy economy.

Only a decade ago, U.S. exports of LNG weren’t even a thing. The process was too inefficient a use of the country’s gas supply. The only terminals built in the United States were for importing the gas, including Cheniere’s flagship Sabine Pass operation.

That changed dramatically with the fracking boom. U.S. natural gas got so cheap that it was the importing facilities that made no economic sense. The turnabout pushed Cheniere to near bankruptcy — a reminder of how the kind of long-term bets the industry is again making can sour. The Obama administration gave the green light for energy companies to launch into the export market, reasoning that LNG could propel climate action, providing a cheaper alternative to coal abroad.

Many mainstream climate advocates were not onboard then, and they are even more alarmed now, with global warming already changing weather patterns and scientists warning that the window to decarbonize is fast closing. A group of prominent U.S. climate scientists this month led a petition signed by nearly 300 colleagues that implored President Biden to rethink his support for more terminals, pipelines and liquefaction plants.

The export operations themselves are substantial emitters of greenhouse gases, before the gas is even burned to heat homes and power factories. Moving the fuel to and from the terminals requires multibillion-dollar infrastructure investments that threaten to anchor regions to the fossil fuel for decades.

Yet following the Ukraine invasion, the Biden administration has doubled down on U.S. natural-gas exports as a linchpin for both its geopolitical and climate agenda. The policy looks beyond Europe to China and India, where the timeline for moving off fossil fuels is much longer.

Even after Europe plans to have ratcheted down its fossil fuel consumption considerably, said Nikos Tsafos, an energy and geopolitics scholar at the Center for Strategic and International Studies, most scenarios project big swaths of Asia will be far behind, choking the atmosphere with coal. “There is no real scenario in which we will have pushed out coal by then,” he said. “This would make gas competitive against it.”

Energy executives are hoping to structure contracts so that the gas goes to Europe in the short term and then eventually shifts to Asia, including India.

The contracts, though, are only part of the picture. Europe right now is not even equipped to take on more U.S. natural gas than has already been sent its way since the Ukraine war began. It would have to build costly new infrastructure, including pipelines and import terminals. These are the kinds of investments that don’t pay off unless they are used for decades, which is not in Europe’s plan.

Making it all work, said Bordoff, could force governments to heavily subsidize such infrastructure, knowing it could be abandoned in Europe’s rush toward renewables, leaving stranded pipelines and other construction.

Or, he said, governments could invest bigger by opting for greener pipelines. They are more costly but could fit into Europe’s plans to move off fossil fuels. When Europe moves past natural gas, the pipelines would be converted for fuels such as the “green” hydrogen envisioned as a backstop for energy-intensive sectors where electrification is still far off, such as airlines and the cement industry.

“If we are going to build additional gas infrastructure, let’s make sure it is built in a way we can use it for zero-carbon applications, as well,” said Bordoff.

It all feels like tortured reasoning to John Beard, who worked for four decades in the petrochemical plants of Port Arthur, Tex., a city that now plays big in the gas industry’s expansion plans. Beard’s climate worries and anger over the extremely elevated rates of cancer and other chronic disease in his community led him into activism.

He is working with the Environmental Integrity Project on a bid to block a state air permit that gas giant Sempra needs to move forward with plans to add a liquefaction plant and terminal in the city that would rival in size the Cheniere operation, which is just down the road.

“We are tired of being sacrificed,” said Beard. “I fear if these industries are allowed to re-entrench themselves with these projects, we will be stuck with this until at least the mid-21st century. At that point, it is game over. No more polar caps. No more snow-capped mountains. … Then what do we do?”

The foot of the Calcasieu Ship Channel in Holly Beach, La., is less than an hour’s drive east, though it feels like another planet, as alligators laze by ponds crowded with shrimp and crabs, and an endangered bird called the black rail makes regular appearances. But resident John Allaire, an environmental engineer who also spent most of his career in the oil and gas industry, has found himself drawn into the fight over gas exporting, too.

His 311 acres of pristine habitat borders an equally tranquil property where Commonwealth LNG is planning to erect an export terminal. It would be built alongside the gas-exporting terminal that Venture Global is already operating farther down the beach and is also expanding.

Allaire’s fight against the Commonwealth project has lately become less lonely, with activists from as far away as New Jersey helping fill the room at a raucous hearing last month. Allaire, a wildlife enthusiast who bought the Holly Beach property a quarter-century ago, launched the fight because he wanted Commonwealth to move to a patch of land less crucial to the area’s ecology.

But the deeper he looked into the inner workings of the gas-exporting business, he said, the more skeptical he grew of all of these expansions, which he fears are a safety hazard as hurricanes sweep through the area and put the United States’ energy security at risk by diverting a resource needed at home to rivals such as China.

“Now, I’m kind of against all of this,” Allaire said, pointing to where concrete would be poured over wetlands for the new construction. “The plan is just get it out of the ground, and sell it to the highest bidder. When this all turns around, you think they will even bother to take all this stuff down? It’s crazy.”