Blog Post

AEIdeas

Good question…. About a week ago, the Washington Post reported something very curious:

A tanker carrying liquefied natural gas from a sanctioned project in Russia’s Arctic has arrived in Boston Harbor, where it will be offloaded for American users. The giant tanker is carrying the first liqueifed natural gas (LNG) exported by the Yamal facility, a $27 billion project whose majority owner is the Russian company Novatek. As of Sunday evening (January 28), the tanker was in the Mystic River at an LNG terminal, where the liquefied cargo will be turned back into gas form and distributed to gas companies and electric power utilities.

You might be wondering — why did a tanker of LNG travel 4,500 miles from the Russian Arctic to Boston (see map above) when the U.S. has been the world’s No. 1 natural gas producer in every year since 2009, and we just set another new all-time production record in November? Oh, and Bloomberg reported this recently:

A second tanker carrying Russian natural gas may be on the way to the U.S., following in the footsteps of a ship now sitting near Boston Harbor with a similar cargo. The Gaselys tanker, which has been sitting for two days in the waters outside of Boston, carries liquefied natural gas originally produced in Siberia, according to vessel tracking data.

In my op-ed in the Boston Herald over the weekend (“Epic U.S. energy boom cruises by region“) I explain the curious 4,500 mile shipment of LNG from the Russian Arctic, here’s a slice:

Although America is a global energy superpower and the United States has been the world’s top producer of natural gas since 2009, New England relies on imported LNG from faraway countries for about 20% of its natural gas. And as for propane, another heating fuel, New England would have been left in the cold had it not been for recent tanker shipments from overseas. This is what happens when you don’t build your own natural gas pipelines, which are the safest and most economical way to transport energy. The trouble is there isn’t enough pipeline capacity to bring in natural gas from the Marcellus shale in Pennsylvania to New England in times of high demand. Even as America’s natural gas production has soared, the pipeline capacity to get it to where it’s needed hasn’t kept up. The problem: political obstacles driven by environmental groups. In the past two years, regulatory obstacles have led to the cancellation of two pipeline projects, which is ominous for a region that desperately needs more natural gas to make up for the shutdown of nuclear and coal plants. Moreover, there are those in the region who promote themselves as climate leaders but continually block new gas pipeline capacity. And pipelines aside, why such a commitment to import LNG when gas could be shipped to New England at a much lower cost from LNG facilities on the Gulf Coast? Thanks to the nearly 100-year-old Jones Act, a relic from the Woodrow Wilson Administration, foreign-flagged vessels are prohibited from moving commodities between U.S. ports. Since there are only a limited number of Jones Act tankers — and none capable of carrying LNG — it’s easier for European LNG exporters to cover supply shortfalls than LNG sellers on the Gulf Coast. Consequently, people in New England pay sky-high prices for fuel and electricity. But fuel, after all, isn’t a luxury. Nor is electricity. People in New England should have access to reliable and affordable natural gas produced here in the United States, not Russia’s Arctic. Expediting approval of natural gas pipelines and repealing the anti-competitive Jones Act epitomizes the sound energy strategy that will make that happen.

MP: Another example of how the archaic, regulatory relic known as the Jones Act raises prices for Americans and another reason why it should be repealed (or modified).