European imports of LNG rose sharply following Russia’s invasion of Ukraine two years ago. The US was well positioned to step in and provided virtually all the additional LNG Europe bought. The current pause on new LNG export terminals runs counter to these trade flows, but it’s increasingly clear this policy has few supporters other than some climate extremists.

Russia has had to pivot towards Asia and FSU (Former Soviet Union) buyers for its natural gas exports. In 2021 Russian exports via both pipeline and as LNG were 244 Billion Cubic Meters (BCM), around 23.6 Billion Cubic Feet per Day (BCF/D). For reference, last year the US became the world’s largest LNG exporter, averaging 11.9 BCF/D.

Last year Russian exports were 142 BCM, down 42% over two years.

Returning gas exports to their previous level will take years if it occurs at all. Negotiations over the Power of Siberia 2 pipeline project with China are moving slowly, and there’s even a suggestion that Russia may begin construction of the pipeline before they have a signed agreement in hand. China clearly feels they have a strong hand to play – and yet China’s own energy strategy is to lessen its dependence on western supplies. Their booming EV market is one way to reduce the need for crude imports. Another is to align more closely with Russia, since on several levels they need one another.

Russia is also expanding its LNG export capability. The Novatek Arctic LNG 2 terminal with annual capacity of 27 BCM (2.6 BCF/D) may start operations as soon as this month. The US has threatened anyone providing “material support” with penalties or criminal prosecution. This apparently hasn’t dissuaded Philip Adkins, CEO of Red Box Energy Services, as described in this FT article.

Other projects that are less far along are vulnerable to sanctions as well as denied access to western liquefaction technology. Russian LNG projects have suffered timing delays. See Russia’s Gas Export Strategy: Adapting to the New Reality for more detail.

Last week the International Energy Agency (IEA) published CO2 Emissions in 2023. In recent years the IEA has moved from providing objective analysis of energy markets to promoting anodyne versions of the energy transition. Few of their projections on energy use are remotely plausible. As a result, some think if Trump wins the election he’ll stop funding the IEA, which seems to have outlived its purpose with its new approach.

The IEA reported that global energy-related CO2 emissions grew by 1.1% last year. Executive director Fatih Birol claimed that increased EV deployment over the past five years had constrained global oil demand, thereby reducing emissions. He overlooked that in the world’s biggest EV market Chinese electricity is 62% derived from coal. At the IEA, cheerleading sometimes beats analysis.

Canada announced that the TransMountain Expansion (TMX) pipeline that they purchased from Kinder Morgan (KMI) in 2018 (see Canada’s Failing Energy Strategy) will finally start operating. It connects oil-rich Alberta with Pacific export terminals in British Columbia.

TMX is planning 2.1 million barrels of linefill next month and another 2.1 in May. Construction has been a financial disaster for taxpayers, with the ultimate cost likely to exceed by 4X estimates when KMI deftly unloaded the project. Alberta has always struggled to get its oil to market. British Columbia’s left-leaning government has long been hostile to TMX, which prompted KMI’s sale. Keystone XL was intended to add southern takeaway capacity until Biden canceled it. Alberta’s oilmen will be relieved.

Canada also intends to expedite approval of new nuclear projects, a pragmatic step that acknowledges the limitations of solar and wind. The Sierra Club Canada is, like its US namesake, opposed to nuclear power. Climate extremists aren’t good for the rest of us.

Carbon Capture and Sequestration (CCS) is often dismissed by those who want the world to rely on intermittent energy. Occidental is building the world’s biggest CCS facility in Texas and is optimistic about licensing the technology. They gave up on one project, named Century, after concluding the economics weren’t attractive enough. However, they drew a $550 million investment from Blackrock in Stratos, which is expected to be commercially operational by the middle of next year.

In Singapore, Exxon and Shell have formed a JV to work with the government on a CCS project. Opponents dislike CCS because it allows fossil fuels to be used without emitting CO2. This is why the rest of us should hope CCS becomes a vital part of the energy chain, since it will preserve our use of reliable energy rather than the intermittent, weather-dependent type.

We have three have funds that seek to profit from this environment:

Energy Mutual Fund

Energy ETF

Inflation Fund

Important Disclosures

The information provided is for informational purposes only and investors should determine for themselves whether a particular service, security or product is suitable for their investment needs. The information contained herein is not complete, may not be current, is subject to change, and is subject to, and qualified in its entirety by, the more complete disclosures, risk factors and other terms that are contained in the disclosure, prospectus, and offering. Certain information herein has been obtained from third party sources and, although believed to be reliable, has not been independently verified and its accuracy or completeness cannot be guaranteed. No representation is made with respect to the accuracy,  completeness or timeliness of this information. Nothing provided on this site constitutes tax advice. Individuals should seek the advice of their own tax advisor for specific information regarding tax consequences of investments.  Investments in securities entail risk and are not suitable for all investors. This site is not a recommendation nor an offer to sell (or solicitation of an offer to buy) securities in the United States or in any other jurisdiction.

References to indexes and benchmarks are hypothetical illustrations of aggregate returns and do not reflect the performance of any actual investment. Investors cannot invest in an index and do not reflect the deduction of the advisor’s fees or other trading expenses. There can be no assurance that current investments will be profitable. Actual realized returns will depend on, among other factors, the value of assets and market conditions at the time of disposition, any related transaction costs, and the timing of the purchase. Indexes and benchmarks may not directly correlate or only partially relate to portfolios managed by SL Advisors as they have different underlying investments and may use different strategies or have different objectives than portfolios managed by SL Advisors (e.g. The Alerian index is a group MLP securities in the oil and gas industries. Portfolios may not include the same investments that are included in the Alerian Index. The S & P Index does not directly relate to investment strategies managed by SL Advisers.)

This site may contain forward-looking statements relating to the objectives, opportunities, and the future performance of the U.S. market generally. Forward-looking statements may be identified by the use of such words as; “believe,” “expect,” “anticipate,” “should,” “planned,” “estimated,” “potential” and other similar terms. Examples of forward-looking statements include, but are not limited to, estimates with respect to financial condition, results of operations, and success or lack of success of any particular investment strategy. All are subject to various factors, including, but not limited to general and local economic conditions, changing levels of competition within certain industries and markets, changes in interest rates, changes in legislation or regulation, and other economic, competitive, governmental, regulatory and technological factors affecting a portfolio’s operations that could cause actual results to differ materially from projected results. Such statements are forward-looking in nature and involves a number of known and unknown risks, uncertainties and other factors, and accordingly, actual results may differ materially from those reflected or contemplated in such forward-looking statements. Prospective investors are cautioned not to place undue reliance on any forward-looking statements or examples. None of SL Advisors LLC or any of its affiliates or principals nor any other individual or entity assumes any obligation to update any forward-looking statements as a result of new information, subsequent events or any other circumstances. All statements made herein speak only as of the date that they were made. r

Certain hyperlinks or referenced websites on the Site, if any, are for your convenience and forward you to third parties’ websites, which generally are recognized by their top level domain name. Any descriptions of, references to, or links to other products, publications or services does not constitute an endorsement, authorization, sponsorship by or affiliation with SL Advisors LLC with respect to any linked site or its sponsor, unless expressly stated by SL Advisors LLC. Any such information, products or sites have not necessarily been reviewed by SL Advisors LLC and are provided or maintained by third parties over whom SL Advisors LLC exercise no control. SL Advisors LLC expressly disclaim any responsibility for the content, the accuracy of the information, and/or quality of products or services provided by or advertised on these third-party sites.

All investment strategies have the potential for profit or loss. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment will be suitable or profitable for a client’s investment portfolio.

Past performance of the American Energy Independence Index is not indicative of future returns.