US gas heartland woos foreign buyers as Europe’s energy crisis deepens

Over the roar of hydraulic fracturing machinery, the boss of America’s biggest natural gas producer weaves through a gaggle of foreign diplomats, sprinkling fine grains of sand into their hands.

Kitted out in company-branded hard hat and shirt, Toby Rice, chief executive of EQT, is in sales mode as he glad-hands dignitaries in the Pennsylvania sunshine.

He has bussed European officials from countries including Poland, Hungary, Greece and the Netherlands 230 miles deep into the shale gas heartlands to promote his answer to the energy crisis that is unfolding as the world searches for replacements to Russian fuel exports. Also among the delegates, who have come from 15 Washington embassies, are officials from such Asian nations as Japan and Pakistan.

“That solution is unleashing US LNG,” Rice said, referring to liquefied natural gas, the chilled, condensed form of gas that can be funnelled into tankers and shipped overseas.

As Europe tries to disconnect itself from Russian supply in the wake of Moscow’s invasion of Ukraine, proponents of the US gas industry see a huge opportunity for their LNG exports to plug the gap. Critics see a cynical ploy to use a foreign war to push more fossil fuels.

The frac sand Rice is sharing will be used to prop open fissures in rock deep underground to release gas from the Marcellus and Utica shale plays of the Appalachian basin — the epicentre of American production.

The US is the world’s leading producer of natural gas, pumping around 96bn cubic feet a day. In the first four months of the year, the country exported 11.5bn cu ft/d of gas in the form of LNG, three quarters of which went to Europe.

The sum is set to rise. In a deal struck with the Biden administration, Brussels has pledged to increase EU demand for American gas by 4.8bn cu ft/d by the end of the decade. For Rice, that is only a starting point: he wants the US to more than quadruple its global LNG exports to 55bn cu ft/d by 2030 — more than total European consumption.

“I’ve never been more excited about the future,” Rice said. “We need to recognise the fact that we are in a bad situation right now. And we need to unleash our resources — unleash American energy.”

The change in fortunes for the US gas industry has been rapid. Just 18 months ago its prospects looked bleak. A $7bn deal between French utility Engie and Texas LNG group NextDecade fell apart over concerns over the environmental impact of US gas.

But today the winds have changed as the geopolitical situation pushes energy security ahead of climate concerns in many countries. “The war in Ukraine has clarified a lot of minds,” said Fred Hutchison, president of the US LNG Association, the Washington-based lobby group that organised this week’s diplomatic bus tour. “There’s one hell of a scramble on right now.”

EQT’s own share price has more than doubled since the beginning of the year. The company’s first-quarter production volumes of 492bn cu ft were up by 19 per cent from the previous year, while its adjusted net income quadrupled to $334mn.

Still, while gas might be cleaner burning than coal, its combustion for heat and power pumps huge volumes of carbon dioxide into the atmosphere — reaching an all-time high of 7.35bn tonnes last year, according to the International Energy Agency. Expanding gas export infrastructure risks locking in dependence on fossil fuels that the world needs to shift away from if global warming is to be contained.

John Kerry, President Joe Biden’s climate envoy, this week blasted what he called “vested interests” that he said were “trying to exploit Ukraine and tell people we need a whole new generation of infrastructure built out” that would undermine climate targets.

US oil and gas operations also spew around 13mn tonnes of methane into the atmosphere annually, according to the Environmental Defense Fund. A far more potent greenhouse gas than CO₂ in the short term, methane is the primary component of natural gas.

“Methane is an issue we attach great importance to — we are looking for greener and cleaner natural gas,” said Thitiwat Sukhasvasti, a counsellor from the Thai embassy who joined the tour.

As the diplomats were shuttled between fields scattered with bales of hay and shining tractors, EQT talked up its measures to clamp down on leaks and clean up the production process. Some were impressed.

“For me personally, fracking was kind of a bad word — maybe up until today,” said Gints Zadraks, a counsellor at the Latvian embassy.

Yet, even beyond pollution, there are big challenges to any expansion of US LNG exports. Pipeline projects to carry gas from Appalachia to the coast have faced dogged opposition, forcing some to be cancelled.

For now, the country’s seven LNG export terminals are running flat out. One of these — the Freeport LNG facility on the Texas coast — was taken offline this week after an explosion, putting around a fifth of US capacity out of action for the next three weeks.

Still, despite Kerry’s scepticism, the geopolitical situation has created a new alliance between the gas sector and the Biden administration as it seeks to provide Europe with an alternative to Russian gas.

“Europe has put itself in a really precarious position,” Amos Hochstein, the state department’s senior energy security adviser, and a former LNG company executive, told a US Senate panel on Thursday. “And we, the United States, are now in the position to help them get out of this precarious condition.”