Exporting Natural Gas Update
Earlier articles in this series include:
- Do We Have Enough Natural Gas? 4/12/13
- Natural Gas Bonanza from Hydrates 6/1/13
- Exporting Natural Gas 6/14/13
In general, these articles established that the United States had ample supplies of natural gas for export, as well as for all the other power generation and manufacturing needs that have been envisioned, and that the future advent of natural gas from methane hydrates would virtually ensure an abundance of natural gas in the future, not only for the United States, but for many other nations around the world.
Natural gas can be the wonder fuel for the next century or two.
The immediate concern is how rapidly the export terminals can be placed into operation in the United States.
This list shows 19 proposed LNG export terminals, but since this list was published, five more have been added to the list, including expansions.
Of these, only one has been approved by FERC, so that construction can begin.
Here is a status report on approvals.
|Sabine Pass-Cheniere||Cameron Parish LA||2.76||Approved 9/7/10||Approved 8/7/12||Approved 4/16/12||6/2015|
|Freeport LNG||Freeport TX||1.8||Approved 2/17/11||Approved 5/17/13||Pending||2018|
|Lake Charles||Lake Charles LA||2.0||Approved 7/22/11||Approved 8/7/13||Pending||2018|
|Dominion Cove||Cove Pt MD||1.77||Approved 10/7/11||Approved 9/11/13||Pending||6/2017|
|Jordan Cove||Coos Bay OR||2.0||Approved 12/7/11||Pending||Pending||2018|
|Cameron LNG||Hackberry LA||1.7||Approved 1/17/12||Approved 2/11/14||Pending||2017|
|a. Combines FTA and non-FTA volumes.
b. Dept of Energy (DOE) must, in a two step process, approve projects with exports to countries having Free Trade Agreements (FTA) with U.S., and countries that do not have FTA with the U.S.
c. DOE has approved most of the other projects, including expansions, that have FTA with U.S.
It’s obvious that at this rate it will be too late for the United States to have an important influence on events in Europe. Much of the output from the above list of LNG export facilities has already been committed for export to Asia.
FERC is the major road block to obtaining approvals, though other political issues could have a bearing on approvals, primarily to non-FTA countries.
It’s important to recognize that we are not alone in developing LNG export facilities, and that the longer we delay building LNG export facilities the more likely that other countries, such as Australia and Canada, will capture the lion share of the business.
The second negative consequence of delay is that the cost of building export facilities is increasing. According to a report in Turbo Machinery International, the cost has essentially doubled between, before 2010 and today. The average cost between 2000 and 2010 was $500/ton per annum (tpa), while today, the average cost is $1,200 /tpa.
The cost of building LNG export facilities is huge. A train, the basic refrigeration and compression unit, with a capacity of 3 to 5 million tpa, which is equal to 0.4 to 0.6 bcf/d, will cost $4 to $6 billion. For example, a facility comparable to the Cameron LNG facility (see above table) would cost nearly $15 billion.
For the United States to compete, and to have an effect on events in Europe, FERC must move more rapidly to approve projects.
There is also the possibility that negotiating free trade agreements will take precedence over exporting natural gas. The thinking is that we should use natural gas as negotiating leverage in free trade negotiations to improve our export of other goods.
Our ability to affect Europe’s reliance on Russia for natural gas could be held hostage to using natural gas as a negotiating ploy in free trade negotiations.
As demonstrated in the earlier articles, there is sufficient natural gas for export, as well as for power generation; increased manufacturing that relies on natural gas; and for heating, without increasing the domestic price of natural gas. There will always be periods when supply and demand get out of balance, such as was the case this past severe winter, but short term demand/supply issues should not override the basic fact that the United States has enough natural gas to meet all its strategic objectives.
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