03/10/2014 05:15 pm ET Updated May 10, 2014

Natural Gas, Ukraine and the U.S.

The crisis in Ukraine has brought attention not only to the military influence that Vladimir Putin can exert, but also upon the influence that Russian natural gas can wield. Fully 60 percent of the European natural gas supply comes from Russia, with half of that supply running through pipelines traversing Ukraine.

The state-controlled Russian provider Gazprom this week ended its discounted gas rate to Ukraine, demanding $1.8 billion in past payments from the nearly bankrupted new government in Kiev. This comes with the implied threat of slowing the flow of gas to Ukraine but also parts of Eastern Europe and the EU, a tactic Moscow used successfully in 2009. The Russian iron fist is perhaps even more persuasive when exercised in energy policy as with troop deployments.

With the U.S. experiencing booming gas production from shale resulting in both very low prices and a supply glut, it has been suggested that the export of U.S. gas resources could be an effective weapon in curbing Russian influence into Ukraine, Eastern Europe and the EU. These arguments are far-fetched.

Unlike crude oil, which can be transported and stored as simply as water, natural gas has only two methods of transport; through pipelines and as liquefied natural gas, or LNG. As impossible as the new construction of a 5000-mile pipeline from the U.S. to support European markets might be, wide scale export of LNG is even less likely.

Building an export terminal for LNG is expensive, costing $4 billion and 4 years to convert an already existing import terminal -- as energy company Dominion Resources is doing at Cove point, Maryland -- and more than $10 billion and 10 years to build from scratch. Once completed, the export process is equally complex, requiring the cooling of the gas to -260 degrees F and putting that liquid into specialized tankers. The transported LNG needs to be "regasified" just as carefully at import terminals before entering the local pipeline network. All of this, obviously, carries tremendous costs and risks and adds to the premium that LNG must command over 'regular' piped gas.

It's not that this technology doesn't exist - a robust LNG export business works in Qatar, for example, where natural gas supplies greatly outstrip local demand, and prices can reasonably expect to stay low indefinitely. But the United States is not Qatar.

Potential LNG exporters demand iron clad contracts, both from gas providers guaranteeing low input prices and from LNG buyers guaranteeing strong premiums for decades into the future before they will agree to spend the fortunes that building export facilities cost. Having followed and traded natural gas for two decades, I can tell you that securing such contracts from both sides here in the U.S. is problematic -- and the more players you have searching for these contracts, the more difficult it becomes.

Despite these hurdles, a few companies are proceeding with LNG plans here in the U.S., while others that have been permitted for construction are moving cautiously, for the reasons I cite. But even with expedited permitting and a breakneck build out of export terminals here in the U.S., significant exporting of U.S. natural gas wouldn't be a reality for at least 5 more years. It is unlikely that market conditions would be as conducive to export then as they appear now. Much more likely is that export terminals would turn out to be as bad a financial idea as the import terminals did that preceded them.

But even if energy companies choose to take these risks, there may be even more important questions to ask: Should our nation open up our own limited natural gas resources to be used as a stopgap for European energy dependence on Russia? Is the U.S. ready to become a fracking mecca supplying the rest of the West with energy, while they happily shun traditional energy development and pursue renewables?

Is the United States now intent upon becoming exactly the type of Petro-state that we resent in Nigeria, Venezuela -- and in Russia?