As provocations by Russian-backed separatists in Ukraine continue, there is increasing discussion in Washington around a number of U.S. policy responses, ranging from authorizing arms sales to Ukraine to enhancing sanctions on Russia. From an energy perspective, there has been bipartisan work on Capitol Hill on legislation to expedite the Department of Energy’s review process for liquefied natural gas (“LNG”) exports to countries that do not have a free-trade agreement with the U.S. Proponents argue that introducing this material unto the world market, even if it does not end up in Europe, can free up other natural gas supplies, and thereby, weaken Europe’s dependence on Russia for natural gas.
While increasing U.S. LNG exports is an important option for Congress and the Administration to consider, there is another step policymakers can take to help Europe and other regions decrease their energy dependence on Russia and other hostile nations. Specifically, Congress and the Administration should consider investing more money in the Unconventional Gas Technical Engagement Program (UGTEP), a State Department-led effort to help other countries implement best practices to develop shale resources. Initially launched in 2010 as the Global Shale Gas Initiative, UGTEP is part of an increased emphasis by the State Department on the nexus between national security, economic prosperity and the environment. Since 2010, countries selected to participate in the UGTEP, such as India, Ukraine and Poland, have received advice from U.S. federal and state government experts on technical and regulatory issues associated with shale gas development.
The U.S. Energy Information Administration (EIA) estimates that there are significant shale gas resources in Eastern Europe, and that developing these resources in a responsible manner could be a significant medium- to long-term response to the continent’s reliance on Russian natural gas. For instance, the EIA estimates that Poland and Ukraine contain 148 and 128 trillion cubic feet of technically recoverable shale gas resources, respectively. For too long, Russia has used the region’s dependence on its natural gas resources as a political cudgel, but shale gas development in Eastern Europe can free these countries from the bullying tactics of Vladimir Putin.
In addition to geopolitical benefits, increased funding for the UGTEP can provide the U.S. with ancillary environmental benefits. As we’ve seen in the U.S., natural gas can play an important role as a bridge fuel to help address climate change. With electricity demand expanding significantly in countries like India, natural gas generation can serve as a lower-carbon alternative to coal while also providing a reliable, base-load source of power to these growing economies. In addition, U.S. officials can help educate other countries on regulatory approaches to addressing casing and cementing standards, wastewater management, chemical disclosure and localized air emissions. While there is strong opposition in some Eastern European countries to hydraulic fracturing, a coordinated effort by the State Department to help leverage U.S. knowledge and expertise can help countries develop robust regulatory regimes that provide the social license necessary for production to occur
The UGTEP can be a win-win for the Administration and Congress by bolstering our geopolitical and environmental goals. Yet, the funding for the UGTEP is modest; in the FY 2016 budget proposal, the State Department requested $5.9 million for the UGTEP, an amount that would be shared with another Departmental energy program, the Energy Governance and Capacity Initiative. Congress and the Administration certainly face a difficult fiscal environment; nonetheless, UGTEP is an important program that can help our allies in Eastern Europe responsibly develop shale gas resources, and in the process, mitigate the influence of Russian natural gas. This program deserves at least a modest increase in funding to help the U.S. achieve these important objectives.
Andrew Shaw is an Associate at McKenna Long & Aldridge LLP