With natural gas trading just off the lows we saw last week (think March 2002) there is a clamor in the gas patch to start shipping the stuff as fast as we can. This is something we should be very careful about, those little hydrocarbon molecules have a lot of uses besides running Tokyo Electric Power generators.
Exporting liquefied natural gas may increase U.S. prices for the fuel as much as 54 percent, the Energy Information Administration said in a report sought by the Energy Department for its review of export permits.
The findings support manufacturers who oppose sales overseas, saying their production costs would rise. Sempra Energy (SRE), owner of the Cameron gas terminal in Louisiana, Freeport LNG in partnership with Macquarie Group Ltd. (MQG), and Dominion Resources Inc. (D) are seeking permits to ship the fuel, as hydraulic fracturing boosts production.
U.S. natural-gas prices, at record lows this month, will increase under all scenarios considered by the agency, which provides research to the Energy Department, even without any shipments to foreign countries.
“Rapid increases in export levels lead to large initial price increases that moderate somewhat in a few years,” the agency said in the report. “Slower increases in export levels lead to more gradual price increases but eventually produce higher average prices during the decade between 2025 and 2035.”
After Cheniere Energy Inc. (LNG) won a U.S. permit in May to ship gas from its Sabine Pass facility in Louisiana, manufacturers using natural gas, led by the Washington-based Industrial Energy Consumers of America, complained that sales to foreign countries may raise prices at home.
LNG exports were criticized by congressional Democrats including Representative Edward Markey of Massachusetts and Senator Ron Wyden of Oregon.
In allowing more exports, the U.S. may be “trading away the enormous economic advantage of having large, low-cost domestic natural gas supply,” Wyden said in an e-mailed statement on Jan. 6.
Oil & Gas Journal writes:
Daily exports of 6 billion cubic feet, phased in over six years, would produce an increase as high as 14 percent in 2022. Boosting exports to 12 billion cubic feet over four years would drive prices up 36 percent in 2018, the report said.
While natural gas exports would spur production, prices at the well would rise 54 percent in 2018 under a more pessimistic estimate by the agency of total gas resources, according to the report....MORE
EIA outlines potential impacts from more natural gas exports
Increased US natural gas exports potentially would lead to higher prices, increased production, less consumption, and more imports from Canada by pipeline, the US Energy Information Administration said in a Jan. 19 analysis. EIA studied the matter at the request of the US Department of Energy’s Fossil Fuels Office.
“Larger export levels lead to larger domestic price increases, while rapid increases in export levels lead to large initial price increases that moderate somewhat in a few years,” it said in an overview. “Slower increases in export levels lead to more gradual price increases but eventually produce higher average prices during the decade between 2025 and 2035.”
US markets would balance in response to increased exports, largely through increased production, the report suggested. More production would satisfy 60-70% of the export increase, “with a minor additional contribution from increased imports from Canada,” it said. “Across most cases, about three quarters of this increase is from shale sources.”
Remaining additional gas exports would come from gas which would have been consumed domestically if prices did not climb, EIA said. Most of the delivered gas decrease would come from electric power plants, which would shift primarily to coal-fired generation and secondarily to renewable sources, though there would be a small decrease in total generation due to higher gas prices, it indicated. Improved efficiency and more conservation also would have an impact, it added.
Several factors will influence the level of any US gas exports, the report emphasized. Costs would need to be competitive with those for overseas projects, it noted....MORE