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Energy analyst Daniel Yergin (Blair Gable for the globe and mail)
Energy analyst Daniel Yergin (Blair Gable for the globe and mail)

How Russia is rousing a sleeping energy bear Add to ...

Russia’s aggressiveness in Ukraine is proving a boon to North American energy producers looking for greater export opportunities.

Whether for natural gas projects in the United States or for oil pipelines in Canada, the West’s confrontation with energy powerhouse Russia has refocused North American political debates – including the controversy over the proposed Keystone XL pipeline – on the need for global energy security.

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In an interview in Ottawa on Tuesday, one of the world’s top energy analysts, Daniel Yergin, said U.S. politicians are only now realizing that the unconventional oil and gas boom promises to tilt the geopolitical balance away from traditional exporters, such as Russia and Iran.

But he added that, in the short term, the United States doesn’t have an energy card to play that would deter Russian action in Crimea and Ukraine.

Dr. Yergin spoke while Prime Minister Stephen Harper, in Europe, observed that the crisis provides a longer-term opportunity for Canadian energy producers in world markets, while the U.S. Congress debates legislation to speed approval of liquefied natural gas terminals that could ship gas to Europe, which is heavily dependent on Russian fuel.

“This is the first time that there is a recognition that the change in the U.S. energy position really has an important foreign policy element to it,” said Dr. Yergin, vice-chairman of IHS Inc. consulting firm and a Pulitzer Prize-winning author on the global energy business. “And there will be an effort to speed up or reform the approval process. But these projects are still going to take years to develop.”

The United States is poised to re-establish its position as a major energy producer; its crude production is forecast to lead the world by 2017, while the country is expected to be among the top three LNG exporters by 2022. Canada, meanwhile, is planning major LNG exports from the West Coast, with oil sands expansions and proposed pipelines that would expand markets in the U.S. Gulf Coast, eastern North America and abroad.

As founder of the Cambridge Energy Research Associates (now part of IHS Inc.), Dr. Yergin has spent an illustrious career at the intersection where world energy producers meet global politicians. He travels easily among the chief executives of the super-majors, the state-owned companies and the world’s energy ministers. He serves as a member of the U.S. Secretary of Energy’s advisory board, and has written several acclaimed books, including The Prize, which won a Pulitzer, and last year’s The Quest: Energy, Security, and the Remaking of the Modern World.

The Washington-based consultant also has a special adviser on the Russian crisis: His wife, Angela Stent, is a Georgetown University expert on U.S.-Russian relations. Her new book, The Limits of Partnership, describes Vladimir Putin as “resentful of American dominance and determined to restore Russia’s great power status.”

His wife “helped me to understand how difficult the dynamics of the U.S.-Russia relationship are,” Dr. Yergin said in an interview before a sold-out dinner speech in Ottawa. Russia is unlikely to be deterred by Western sanctions, because Crimea and Ukraine are at the heart of Mr. Putin’s foreign policy; they are peripheral in North America, and Europeans are too dependent on Russian oil and gas to mount serious opposition to the Crimean annexation.

During a visit to Europe on Tuesday, Mr. Harper said North America needs to step up its oil and gas exports to help lessen the vulnerability of the West – and Europe in particular – to Russia’s energy exports. He also noted that Moscow relies on oil and gas exports for a large share of its government revenues.

In Washington, meanwhile, legislators are urging the Obama administration to speed approval of LNG projects to send a message to Mr. Putin – even though projects being approved will not be on stream for several years. “The last thing Putin and his cronies want is competition from the United States of America in the energy race,” Senate energy committee chairwoman Mary Landrieu said at a hearing Tuesday.

To some extent, the U.S. politicians advocating expedited LNG approvals are the same ones who have been urging speedy development even before the Russian crisis erupted; they’ve simply found a new justification.

Dr. Yergin said the crisis has raised the general awareness in Washington about the geopolitical benefits of North American oil and gas production. That could boost support for the Keystone XL pipeline, as well as exports from Canada to other markets, he said. “This does reinforce the energy security benefits of an integrated North American energy system,” he said.

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