Senate confirmation of former Texas governor Rick Perry as Secretary of Energy coupled with the appointment of former CEO of energy titan Exxon Mobil, Rex Tillerson as Secretary of State highlight the place and power of Texas and its energy sector in the new Trump administration and the US. Meanwhile as the US’ premier energy city, Houston is more so than ever at the centre stage of the global energy sector and US’ rising energy diplomacy potential.
While global energy movers and shakers will be descending once again on Houston next week for the 36th annual CERA Week conference to discuss the future of natural resources, many things have changed.
The US has emerged as an energy superpower: a world leader in oil and natural gas production, a leading producer of refined petroleum products, and a rising exporter of liquefied natural gas (LNG). This US energy revolution was all made possible by the shale boom, which made it much more economical to extract unconventional oil and gas out of new and existing reservoirs by newly perfected horizontal drilling and hydraulic fracturing techniques.
This energy boom greatly contrasts with the anxiety of the 2000s, when worries about America’s energy security and expectations that ever-greater energy imports would be needed ran high. Indeed, America’s energy sector and its standing in the world has transformed significantly in just the past decade.
The new US leadership, including the two aforementioned Texans, is in a unique position to harness the country’s energy prowess to achieve both domestic economic benefits and meaningful foreign policy triumphs for this country.
The same goes for Houston.
Houston is not only the undisputed American energy capital but also the top energy hub in the world. It played the leading role in the US energy revolution. Many of the breakthroughs with shale development took place in Texas, pioneered by the “fracking king’ George P. Mitchell from nearby Galveston.
Houston is also where Cheniere Energy is located – the company that in 2016 launched American LNG exports to distant markets including: Brazil, India, Kuwait, Spain, China, and Mexico. Just outside of the city, stands the Freeport LNG export terminal. Others massive terminals such as Corpus Christi and Sabine Pass are nearby on the Gulf coast. A world-class LNG export hub is emerging around Houston. Visits from foreign statesmen and policy makers to Houston will only become more frequent as American allies in Europe, Asia, and Latin America seek more American LNG exports to help them diversify their energy imports.
Sabine Pass: First among equals
(Credit: Cheniere Energy)
Accordingly, Houston and its energy players may soon have to take on a larger diplomatic role. As the volume of global energy trade that passes through Houston increases, the city will increasingly have to lead globally. Houstonians will be able to leverage the country’s and the region’s energy leadership to benefit not only America’s economy but also its international interests and partners. Indeed, America has the potential to leverage its position in global energy markets to support its allies and reign-in its rivals. Moreover, as countries look to emulate the U.S. energy revolution, its shale boom, and its LNG export technologies, Houston will become an ever more important destination for foreign representatives.
At the same time, the Trump administration’s foreign policy stands on the principle of “America First.” A new “America First” energy plan was also recently announced. This should not be understood rhetorically, and pursued as a solely inward-looking agenda. If America is truly to be first, the US will need to (among other priorities) solidify its position as the leading player in the global energy markets. Likewise, President Trump will have a unique opportunity to pursue energy diplomacy like no previous administration has had. And on both fronts, Houstonians may be the best situated to take the lead.
Dr. Agnia Grigas, author of The New Geopolitics of Natural Gas (Harvard UP, 2017), is a Senior Fellow at the Atlantic Council in Washington DC. Follow her @AgniaGrigas and Grigas.net
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