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Playing the gas card

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By Kathryn Klaber
Monday, March 10, 2014, 9:00 p.m.
 

For those of us who are parents of teenagers, recent events in Ukraine hark back to when we were their age, the world map contained a very large USSR and movie villains were likely to be duplicitous Russians. Since then, the world has gotten smaller and the means by which we get our information about fast-moving developments have multiplied.

The West bemoans the woefully few options in the current conflict, despite technology orders of magnitude more sophisticated than 30 years ago. It could actually be new technology that allows us to extract energy from tight shales lying miles below the earth that gives us a powerful option in dealing with Russia — assuming the U.S. and its European allies adopt an urgency to get the gas to market.

An oft-used tool of Russian aggression — which should serve as a counterstrategy for the United States and its allies — is the role of natural gas. Russian-owned energy firm Gazprom called in a $1.89 billion loan from Ukraine on Friday, with the punishment being higher natural gas prices. The U.S. is moving a loan guarantee to assist Ukraine to offset these higher prices, representing a Band-Aid when considering the heavy dependence by all of Europe on Russian gas supplies. This would not be the first time Russia has used natural gas supply as a strong-arm tactic. In fact, Russian President Vladimir Putin's Ph.D. thesis, “The Strategic Planning of Regional Resources Under the Formation of Market Relations,” indicates an early affinity for integrating energy policy into foreign relations (or lack thereof).

Thanks to technological advances and modernization of regulations in the last decade, the U.S. is in a position of strength on the energy front. But it will require political, business and civic leaders both domestic and abroad to get out from under the manufactured scare tactics on environmental issues and enable global peace through safe shale gas development and distribution. The slow pace of our country's regulatory approval for liquefied natural gas exports to our allies appears even less tolerable in the context of recent Russian aggression. Bills have just been introduced in the U.S. House and Senate to speed progress. These must pass swiftly to signal American strength of conviction. Friendly energy takes away one of Putin's most powerful weapons against Russia's neighboring regions that have long been subject to market and supply manipulations.

On a recent trip to Great Britain, I had a firsthand view of the early stages of its foray into onshore shale development. It is blessed with tremendous reserves, yet has not yet moved into exploration and production phases, instead bogged down by planning horizons that daunt even the most patient investors. Our capable and resourceful British friends deserve to play a major role in leveraging their own resources as the strategic economic and geopolitical asset they can be, as do Poland and other European states yet to explore their own shale energy potential.

A critical piece of the long-term solution in Russia's sphere of influence, and even to the current confrontation in Ukraine, lies far beneath the soils of the U.S. and many of its allies. As we safely bring friendly energy to the surface, we will find ourselves to be an even stronger player on the global stage.

Kathryn Klaber is CEO of The Klaber Group and recently concluded her tenure as the first CEO of the Marcellus Shale Coalition.

 

 
 


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