The US should not intervene in Ukraine!

[Dragonetti]

These games and wars are fought over the long term. Russia will need to sell the gas to proper their economic gains. Russia really has no other export.

[Heywood]

These games and wars are fought over the long term. Russia will need to sell the gas to proper their economic gains. Russia really has no other export.

Another thing Russia has to think about is this: If there is war the pipelines that provide Russia with many economic and strategic benefits are at risk of being destroyed.

[Anomalocaris]

1. I don't think the EU/NATO will endure the loss of natural gas.

Russia cannot turn off the spigot without enduring some serious economic consequences itself. Further, last time they did it(2006 and 2009) caused Europe to start diversifying its gas sources and spurred the production of facilities to stock pile gas.

Countries like Germany now have huge stock piles of gas and could send gas to other countries like Ukraine for a while. Also we're in April and Europe needs a less gas then if we were in the middle of winter. The United States is preparing to star exporting gas to Europe in 2015 and those plans are probably being accelerated and expanded. Europe is in a better position now than it was in 2006 and 2009 to endure a short term gas disruption.

Russia's position is strong in this game but not as strong as you think.....especially over the long haul. Sure they have a loaded gun but they have to be concerned about shooting themselves in the foot. In the long run Russia needs to sell gas and they have to worry about creating a need in Europe for it to develop infrastructure that will allow it to boycott Russian gas when it wants.

Actually, Germany gets 35% of its own gas needs from Russia. Germany's only major domestic energy reserve is coal, and very low quality, high polluting coal at that. Coal can not replace natural gas even if Germany reverses all her positions on green house gas and other pollution. If Russian gas stops, German couples will not be able to cook and German grandmothers will freeze to death in their apartments. Europe had no ability to replace Russian gas with domestic production now, and European ones tic politics makes it exceedingly unlikely for it to develop any meaningful capacity in 1, 3, or 5 years.

The United States has surplus natural gas, but this is such a recent development that there is no infrastructure to export any of it. There won't be any infrastructure to export it in 1-2 years, and any infrastructure capacity to export gas that can be built in 5 years would be tiny compared to European consumption of Russian gas.

In a 5 year time horizon, Russian position is powerful.

As to longer term, it is important to recognize Russian regard keeping Ukraine in its orbit as vital to her own existential security for the foreseeable future. A Ukraine outside Russian orbit is more deadly to Russian perception of her own security and freedom of action than soviet nuclear missiles in Cuba had been dangerous to the US in 1960s. It is true on a time horizon longer than 5 years, the west can make Russian feel pain. But rest assured from Russian point of view, the west can not inflict nearly as much pain on Russia as the pain of loss of Ukraine.

So presenting Russia with the option of giving up Ukraine or suffer the worst we can do to it is idiotic. The worst we can do to it won't come close to losing Ukraine, and so will under no circumstances motivate Russia to give up Ukraine. At the same time, inflict ineffectual pain on Russia will most certainly hurt us. And we will suffer it for no possibility if any gain.

---

These games and wars are fought over the long term. Russia will need to sell the gas to proper their economic gains. Russia really has no other export.

Another thing Russia has to think about is this: If there is war the pipelines that provide Russia with many economic and strategic benefits are at risk of being destroyed.

If it is destroyed, Europe would be more eager to rebuild it than Russia.

[Heywood]

Actually, Germany gets 35% of its own gas needs from Russia. Germany's only major domestic energy reserve is coal, and very low quality, high polluting coal at that. Coal can not replace natural gas even if Germany reverses all her positions on green house gas and other pollution. If Russian gas stops, German couples will not be able to cook and German grandmothers will freeze to death in their apartments. Europe had no ability to replace Russian gas with domestic production now, and European ones tic politics makes it exceedingly unlikely for it to develop any meaningful capacity in 1, 3, or 5 years.

Europe has a robust rail system and seaports. All that needs to be done to move natural gas from the US to Europe is build a bunch of these.



http://en.wikipedia.org/wiki/Tank_container

Which will happen if Russia decides to price gouge on gas. In the states tremendous amounts of oil are being moved by rail now out of North Dakota because the Obama administration has blocked the construction of a pipeline.

[Anomalocaris]

Huh, no. You have no idea the volume of natural gas transacted. You have no idea how much it costs to transport these in gaseous or liquified state by rail. You have no idea what it takes to move natural gas safely. You have no idea hour much the Russians can gouge and still vastly undercut any natural gas you can move to Europe on rail car sized containers.

You need pipelines, dedicated LNG terminals, and highly specialized LNG ships. None of which exists in the US, or in Europe at appropriate locations.

[Heywood]

Huh, no. You have no idea the volume of natural gas transacted. You have no idea how much it costs to transport these in gaseous or liquified state by rail. You have no idea what it takes to move natural gas safely. You have no idea hour much the Russians can gouge and still vastly undercut any natural gas you can move to Europe on rail car sized containers.

You need pipelines, dedicated LNG terminals, and highly specialized LNG ships. None of which exists in the US, or in Europe at appropriate locations.

I did some back of the envelope calculations. You need about 6 post panamax ships landing each day in Europe with 5000 tank containers on each ship.

I'll concede....it would take a while to build the amount of iso tanks, ships, rail cars, locomotives and port facilities to completely replace the gas coming from Russia.

[Anomalocaris]

Gas is not oil. Gas weigh twice as much as oil for equivalent amount of energy, is highly volatile and vastly more ignitable, and needs to be shipped under high pressure. I don't think you've ever dealt in natural gas industry if you think natural gas can be safely or economically handled in industrial volumes using container sizes tanks moving existing rail and marine container infrastructure.

Moving high volumes of natural gas by rail is a nonstarter. Russians have proposed precisely this idea to the Chinese to leverage existing rail infrastructure in the two countries to avoid the initial startup cost of building pipelines to china. The economic analysis in 2008 when gas price was 4 times as high as they are now was so negative the Chinese accused the Russians of bad faith and broke off the negotiation and decided to do without Russian gas. And this did not involve a maritime stage.

So it seem fair to say Russians can jack up gas price 400% and the Europeans would still find it cheaper to buy Russian gas coming in pipelines than American gas in container sized shipping tanks.

[Heywood]

Gas is not oil. Gas weigh twice as much as oil for equivalent amount of energy, is highly volatile and vastly more ignitable, and needs to be shipped under high pressure. I don't think you've ever dealt in natural gas industry if you think natural gas can be safely or economically handled in industrial volumes using container sizes tanks moving existing rail and marine container infrastructure.

The rail industry ship LNG in tank cars every day.

[Anomalocaris]

Obviously pipelines are high capital investment projects and it is not feasible to lay a pipe to everywhere gas might be needed. So at distal end of a natural gas distribution system some volume of natural gas must be shipped by rail or road to small or medium volume, or intermittent customers. These customer have to pay the hefty premium per MMBTU to get any gas at all, because their volume can't justify a pipeline. But you would be hard pressed to find any customer as large as say one medium sized combined cycle power plant who might find it economical to use rail shipped LNG. They are all pipeline fed.

But we are not talking about distribution to low or medium volume, intermittent customers. We are talking about massive bulk shipments. Containerized shipment won't cut it.

[Heywood]

Yes, but how much?

Not a lot.....certainly not 130 billion meters a year that the Russians supply Europe.

However in 2008 the US railroads shipped less than 10,000 carloads of crude oil in a year. In 2013 it was 400,000 car loads. In 2014 in will be even more. I don't see why US rail couldn't ramp up LNG shipments just as quickly.