American exports are shaking the energy world

HOUSTON — A shale gas drilling boom over the last decade has propelled the United States from energy importer to exporter, and the country has taken a giant leap toward the goal of energy independence declared by presidents for a half century.

Now, the upheaval of the domestic energy sector is going global. A swell of gas in liquefied form shipped from Texas and Louisiana is descending on global markets, producing a broader glut and lower energy prices.

The United States was supposed to be a big importer,

not a world-class exporter, of liquefied natural gas, or LNG. The frenzy of drilling in shale gas fields across the country changed that over the last decade, creating a glut far larger than domestic demand could possibly consume. Companies that spent billions of dollars to build import platforms suddenly had useless facilities until they spent billions more to convert them for export.

The switch will remake the global gas market for decades to come. Energy experts are predicting that the transformation will weaken Russia’s dominance over European power markets, help clean the air in cities across China and India by replacing the burning of coal, and eventually provide cheaper and cleaner fuel to Africa.

The full dimensions of the wave over the next four or five years, including its impact on the environment and climate change, are hard to predict, in part because they will depend on the policies adopted by many governments. But as several American multibillion-dollar export terminals come on line, few doubt that the influence of more gas, as the cleanest burning fossil fuel, will be consequential for powerful and poor countries alike.

The Mexican Model

Experts point to Mexico as an example of how transformative gas can be in a matter of only a few years. As the U.S. shale boom accelerated, producing more gas than its northern neighbor could consume, Mexico decided to import as much cheap gas as possible. Mexico replaced its dirtier-burning coal and petroleum products, and now more than a quarter of the country’s electricity is powered by U.S. gas.

Four additional crossborder pipelines are to be completed over the next two years, and many more are in the planning phase. The gas imports have improved air quality, helped Mexico reach goals to reduce its carbon footprint to meet Paris climate agreement targets, and freed capital to invest in more exploration and production of oil, which is more valuable on world markets.

Because Mexico has a border close to Texas oil and gas fields, pipelines have made the transformation relatively easy. Exporting and importing liquefied gas is more complicated. Gas is expensive to ship overseas because it must be cooled to minus 260 degrees Fahrenheit to be shipped in giant tankers. The importing country then has to turn the liquid back into gas so it can be transported in pipelines. But even though liquefied gas is usually more expensive than piped gas or even coal, demand and supplies are growing fast.

“This bulge of LNG is going to completely upset the apple cart of world energy politics and the global competition of fuels that is still hard for people to comprehend,” said Amy Myers Jaffe, an energy security expert at the Council on Foreign Relations. “Russia will be the loser. We can already see their leverage on the gas market in Europe and the leverage they are trying to create over China dissipating.”

Enough LNG export capacity is under construction to catapult it from 33 percent to nearly 40 percent of the total international gas trade by 2022, even while piped gas shipments are also growing globally.

Roughly 60 percent of the new LNG export capacity is being built in the United States, which only began exporting large supplies last year, giving Washington a new tool for its foreign policy toolbox and raising the country to the top tier of exporters, which includes Qatar, Australia and Russia.

Displacing Coal

Europeans tend to be suspicious of hydrocarbons like gas, and especially the hydraulic fracturing methods that coax gas from shale, much preferring renewables. Many skeptics in Europe and the United States note that the production and transport of gas can leak methane, a powerful greenhouse gas, making it less reliable as an environmental solution.

Natural gas consumption in Europe had been declining in recent years as the continent moved strongly to renewables and as some countries also burned more cheap coal to replace nuclear. But demand for gas rebounded in 2015 and 2016, principally at the expense of coal.

The United Kingdom may be leading the way, with carbon pricing and other policies designed to phase out coal power by 2025, thus giving gas a big opening. For most of the other big economies, gas is a supplement, especially in France when its nuclear plant fleet needs repairs as it did in 2016. German gas-fired power plants that were dormant in 2015 have come back on.

The biggest increase in demand for liquefied natural gas will come from China and India, as their growing middle classes demand more power and as their industries grow.

The International Energy Agency estimates an annual growth rate of 8.7 percent in Chinese gas consumption through 2022.

Gas is more expensive than coal in China, but the government is phasing out coal-fired boilers and switching to gas-fired ones, principally to help relieve air pollution in Beijing and other cities. The government is aiming to replace coal in textile factories.

Bridge to Renewables

Only 15 countries imported liquefied gas in 2005. Twelve years later, that number has more than tripled, with such major economies as Pakistan, Thailand, Jordan, Egypt, Poland and Colombia becoming importers in the last few years.

Many countries see the replacement by gas of coal and heating oil as a relatively painless way to reduce their carbon footprint, especially if potential methane leakage can be addressed. But many environmentalists say gas is only useful as a bridge fuel to a new age of renewables, if the bridge is short.