Exporting Natural Gas
Various forces are arrayed against permitting the export of liquefied natural gas (LNG).
A few industry sources, primarily DOW Chemical Company, oppose the export of LNG for fear that the price of natural gas will rise to the point where their business will be harmed.
Environmentalists, such as the Sierra Club, and their allies in Congress, including Representatives Markey and Waxman, oppose LNG exports because they believe it will increase methane emissions to the atmosphere. The Sierra Club, for example, has declared war against natural gas, i.e., methane.
In the view of environmentalists, and their allies, exporting LNG will merely increase the production of natural gas; something they believe should be avoided at all costs.
In this, they are partly correct; exporting LNG will increase the production of natural gas.
The real question, however, is, do we have enough natural gas to permit exporting LNG.
In the past few weeks, my articles have taken an objective look at our nation’s supply of natural gas.
The first article, Do We Have Enough Natural Gas?, examined the ways in which natural gas could be used, such as coal-to-gas switching for power generation, demonstrated that even with the largest probable use of natural gas we would still have around a sixty-year supply of natural gas.
Gas-to-Liquids (GTL) was also examined as an additional use of natural gas and it was shown that GTL would have a minimal effect on our supply of natural gas.
Finally, an article explored the probable future of mining natural gas from methane hydrates. See Natural Gas from Methane Hydrates.
All of this evidence clearly demonstrates that the government should allow the export of LNG, with market forces determining the quantity that is actually exported.
Other countries are gearing up to export LNG, including Australia and Canada.
Qatar, Algeria, Nigeria and Indonesia are already exporting large quantities of LNG. Shale gas in China is likely to reduce the market for LNG in China1.
All in all, it’s very likely that these competing sources of LNG will limit the amount of LNG the United States will actually export.
The article, Do We Have Enough Natural Gas?, estimated that 10.4 Tcf per year of natural gas could be exported if all 19 export terminals were authorized and built. The article also suggested it would be highly unlikely for all 19 terminals to be built.
The ICF Consulting firm’s highest export case is 5.8 Tcf, or approximately half my estimate.
ICF also projects that the price for natural gas at the Henry Hub will increase by $1.02 as the result of their maximum predicted exports of 5.8 Tcf, which should allay any fears that DOW Chemical or other manufacturers may have about natural gas prices rising precipitously.
Exporting LNG will also increase jobs and GDP.
Unfortunately, this administration may be siding with the Sierra Club and other environmental organizations, and their fear that green house gasses are causing global warming.
The facts strongly support the export of LNG. We can only hope that the fear of global warming doesn’t limit LNG exports and the many economic benefits that will ensue.
- The EIA’s latest report, June 10, 2013, estimates that China has the largest technically recoverable reserves of natural gas in the world.
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