LNG Export Applications in the USA

abarrelfullabarrelfull wrote on 23 Jan 2012 09:22

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For some reason, the idea of the USA exporting natural gas has become controversial. There are those who claim that US citizens and companies have a God given right to cheap energy, and exporting gas will damage that.

Ed Markey, a congressman from Massachusetts, is against any LNG exports. In a letter to Energy Secretary Stephen Chu, He worries that:

exporting America's natural gas would raise energy costs for American consumers, reduce the global competitiveness of U.S. businesses, make us more dependent on foreign sources of energy, and slow our transition away from dirtier fuels.

To add fuel to the fire, the EIA has released a report that concludes that LNG exports will lead to higher prices for US consumers:

Under the Reference case, domestic wellhead prices rise by about 57 percent between 2010 and 2035.

Meanwhile the Department of energy is considering applications from 7 projects having given full approval to one to export to non FTA countries

The projects are as follows

So should US consumers get worried about these developments?

A few points to ponder

  • Can you imagine the reaction if the Auto industry were told not to export so that Americans can get cheaper cars
  • Is Rep Markey really someone with credibility here?
  • The 57% is a little misleading, as even the base case has considerable inflation
    • On average, from 2015 to 2035, natural gas bills paid by end-use consumers in the residential, commercial, and industrial sectors combined increase 3 to 9 percent over a comparable baseline case with no exports
    • , it should be noted that natural gas prices in all of the cases are far lower than the price of crude oil when considered on an energy-equivalent basis

Even with significant exports, the USA will still have some of the cheapest natural gas prices in the world, the the rush to invest in industries utilising it is going to continue. With 18% more natural gas production, the industries supplying upstream will have nearly a fifth more orders. Moreover, the increased production of natural gas liquids, is actually what is spurring investment in petrochemicals, an industry that is often used a reason not to export natural gas. Perhaps most important of all these natural gas liquids are a substitute for imported crude oil, and will help to keep prices of gasoline down

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