U.S. Now One Step Closer To Being Net Natural Gas Exporter

Exporting natural gas just got easier.

This afternoon, the Department of Energy approved the second application for a facility to export liquefied natural gas (LNG) worldwide. Today’s approval to export up to 1.4 billion cubic feet of natural gas per day goes to Freeport LNG Expansion, on Quintana Island in Texas, for 25 years. The approval process now moves to the Federal Energy Regulatory Commissions (FERC), so the company is not in the clear yet.

Several companies have received nearly two dozen permits from DoE to export LNG to countries with which the U.S. has a free trade agreement (FTA), but the approval process has been much slower for permits to export to non-FTA countries. 19 facilities that want to export LNG to non-FTA countries are still under review by the Energy Department — including a joint project between ExxonMobil and Qatar Petroleum.

The natural gas industry is booming in the United States, largely due to the practice of fracking, which opened up large parts of the country to extraction previously thought uneconomical to drill. Natural gas can be transported via pipeline across land, but when companies want to export the fuel overseas, they have to use ships. Since natural gas (mostly methane) in gas form would require a large ship to transport, it must be cooled and liquefied before it can be exported across an ocean.

In the last decade, companies built facilities to import natural gas because the U.S. expected lower production than what fracking actually allowed. Once the shale gas boom sharply increased domestic production, they have tried to turn those import terminals into export terminals. Cheniere Energy’s Sabine Pass terminal, the first facility to receive DoE approval to export to non-FTA countries, is one example of this.

The reason for the delay of such applications is due to opposition largely from the chemical industry, which fears that exports will lead to an increase in the price of natural gas (which it uses for industrial purposes), and those who care about carbon emissions and the environment, who point out that the U.S. still does not know the consequences that exports will have on carbon emissions.

Congressman Ed Markey, running for John Kerry’s old senate seat in Massachusetts, said today that “The Department of Energy still doesn’t even know what the impact of natural gas exports will be on domestic businesses and consumers, but they are approving more exports anyway.”

If the U.S. is increasing exports, it becomes even more critical to ensure that the natural gas obtained through hydraulic fracturing is as safe as possible, with zero fugitive emissions. Yesterday the Interior Department released draft fracking rules, and there are some easy ways (5 in fact) to make the rules adequately protect Americans and reduce greenhouse gas emissions. It is one thing to argue for weak safeguards to give Americans access to “cheap energy” — it is another to argue for weak rules that poison the air and water to export the energy to other countries.

The net climate effects of LNG exports depend largely on the energy currently used by the importing country — what the gas will replace. Coal-heavy economies that replace their coal with natural gas should see lower emissions, but this transition could threaten more valuable transitions to renewable energy.

The Energy Department said in today’s approval that “the exports proposed in this Application are likely to yield net economic benefits to the United States.” Left unsaid is the fact that the more fossil fuels left in the ground, the easier it is to reduce greenhouse gas emissions, which would benefit the economy in myriad ways.

18 Responses to U.S. Now One Step Closer To Being Net Natural Gas Exporter

  1. catman306 says:

    From Fox News 2004

    AP: LNG Tanker Attack Would Be Devastating

    Published December 20, 2004

    Associated Press

    WASHINGTON – A terror attack on a tanker delivering liquefied natural gas (search) at a U.S. port could set off a fire so hot it would burn skin and damage buildings nearly a mile away, government scientists say in a report expected to influence where new multibillion-dollar terminals will be built.

    That applies to LNG ships departing for foreign lands, too.

  2. Mike Roddy says:

    “Coal heavy countries that replace their coal with natural gas should see their emissions decline”.

    Wrong. Maybe, maybe not.

    Ryan, you need to do your homework. Have you read the Howarth study, or looked at NOAA data? Gas is likely to be just as bad as coal when it comes to GHG’s. Stories to the contrary originate from Koch Industries and Exxon, and have no place here.

  3. Paul Klinkman says:

    To anyone who invested in a methane “natural” gas furnace or hot water system, you should have seen this coming. Billionaires want as much money as possible and China for one can outbid the U.S. for “American” methane gas.

    If it will assuage any ostriches, the “American” natural gas can be shipped to a third country and the third country’s former supplier can ship to China.

    Oh, and we get to keep the toxic ground water because, after all, we’re the third world country.

  4. Mulga Mumblebrain says:

    This is ‘happy-clappy’, the ‘USA is Number One and Don’t You Forget it’ agit-prop, so typical of ‘progressive’ Democratic verbiage. As Plan Obama has swung dramatically into ‘lame duck’ mode, to ensure ‘progressive’ surrender to the Mad Hatters over the next three years, certainly throttling any hope of environmental decency, the babies to be thrown out with the bathwater are plain enough to see, the Keystone Kid certain to feature prominently.

  5. Mulga Mumblebrain says:

    It’s known as ‘disaster capitalism’.

  6. Timothy Hughbanks says:

    Indeed. It is surprising that a report in ClimateProgress gets this wrong. Our our host (JR) would tell you in his sleep, at the actual concentrations of CO₂ and CH₄ in the atmosphere, the (marginal) climate forcing effect of CH₄ is about 30 times as large as the (marginal) forcing caused by CO₂. Consequently, if only a few percent of the natural gas produced escapes into the atmosphere instead of being combusted, all the greenhouse advantages of methane are lost for at least a couple of decades (the atmospheric ½-life of CH₄ is about 11 years).

    This has been discussed extensively here on CP, Ryan. As Mike Roddy says, do your homework.

  7. asdf says:

    HELL NO!!!!!!!!!!!!!!!

    Time to act people. Stop the planetary genocide.

  8. Colorado Bob says:

    One other point , the Earth has never seen a rise from 280 to 400 in 160 years. . Period . Ever .
    I looked up “fracking” , that gas was buried 430 million ago . We are burning gas that was buried before life crawled on land.
    This is very really c “Old Carbon” .

  9. Natural Gas is a lose, lose, lose product. First, it screws up the climate. Even if there were zero methane leaks, we are already over the limit of CO2 pollution and natural gas adds about 1/2 as much CO2 to the environment as does coal. It’s like telling a guy who smokes that his lungs are showing effects and asking him to cut down from two packs a day to one. Too late.

    Second, there’s fracking. We’ll wreck the water supply, as well as a lot of surface features with all this new fossil fuel extraction.

    Third, as the article notes, because it’s temporarily cheap, natural gas squeezes renewables out of the market along with coal.

    Lose, lose, lose — and pretty much everybody in Washington thinks it’s wonderful…but isn’t this the same bunch of clowns that voted for the corn ethanol subsidies and backing up nuclear power plant insurance and renewing the oil tax breaks?

    Lose, lose, lose.

  10. Colorado Bob says:

    We’ve been burning every carbon atom that ever came our way.

    Now we pay the bill.

  11. Raul M. says:

    Does this mean there are better ways to export the gas leaking off the coast of Alaska than to just let it drift?

  12. roger blanchard says:

    Could it be that the price and production of natural gas isn’t quite what is suggested in the article?

    In April 2012 the wellhead price of natural gas was $1.89/mmBtu. In April 2013 it got up to approximately $4.40/mmBtu. It appears likely that the price will rise to $8/mmBtu, or higher, in the next few years for obvious reasons.

    When the price of natural gas rose to >$10/mmBtu, in 2008, the natural gas industry went on a drilling frenzy, mainly drilling fracking wells. That led to an oversupply of natural gas which led to the price of natural gas falling below $2/mmBtu.

    The problem with <$2/mmBtu natural gas is that for fracking wells, it costs approximately $8/mmBtu to produce the gas. Natural gas producers have been losing a substantial amount of money producing natural gas in the last few years.

    In the last year or so, natural gas producers have significantly cut back on drilling. The number of rigs drilling for natural gas slipped to near a 14-year low last month and the current gas rig count is about a fourth of what it was at its September 2008 peak.

    Because fracked natural gas wells decline so rapidly, a continuously high rate of well drilling is required just to maintain production. As an example, fracking wells in the Haynesville and Barnett shale plays declined at 68% and 61% respectively in their first year of operation according to a report by the geologist David Hughes.

    Because the rate of drilling has declined, year-on-year production of natural gas in the U.S. has been declining. I expect that to continue over the next few years.

    There are several issues that will limit U.S. natural gas production in the future even if the price of natural gas rises above $8/mmBtu.

    First, with the industry’s financial problems associated with the drilling boom of recent years, I expect natural gas producers to be wary of going overboard on drilling in the future.

    Second, several of the most productive shale gas plays are in decline including Haynesville and Fayetteville. Barnett appears to be at peak production. Those are 3 or the 4 most productive shale plays for fracking.

    You may make the argument that there are 30 shale gas plays in the U.S. and the plays mentioned in the last paragraph are only 3 of the 30. The problem with the argument is that 88% of all shale gas production in the U.S. comes from just 6 shale gas plays.

    Not all shale gas plays are equivalent. Some are highly productive, some will not be productive. The industry is producing the most productive plays first.

    Petroleum geologist Art Berman made the case several years ago that there is 20-25 years worth of natural gas in the U.S. at the then rates of production, not the +100 years that is often stated by media sources.

  13. Raul M. says:

    It would seem a different approach for a company to just take investors money and use it to capture the fugitive emissions from the sea floor of the gulf of pollution or the methane that just bubbles up from Alas-can waters.
    The point being that the gas would be captured and as of now it is just allowed to bubble up on its own to mingle as it will. An example would be the beyond pollution incident in the gulf of pollution when beyond pollution captured methane leaking up to the surface. There doesn’t seem to be much said about the methane just bubbling up from the sea floor adjacent to the well head as of late so it may be that they abandoned their efforts to use investor monies to protect the environment in that example.

  14. Hear, hear. These well-known facts make one wonder about the financial case for building LNG infrastructure, which is very expensive and assumes a long-term business. The ships alone cost $220 million a pop.
    It’s a pretty safe bet that few of these export terminals will ever be built.

  15. Mulga Mumblebrain says:

    Absolutely! It is the rate at which the atmosphere is being polluted and the climate destabilised that is unprecedented and calamitous.

  16. Mulga Mumblebrain says:

    Roger, how dare you introduce facts, damned facts, into the cornutopian fantasy of the fracking fanatics? Have you no sense of propriety? After all there are still lots of patsies out there requiring fleecing in the fracking boondoggle. If they saw your damned ‘facts’ they might be scared off before being ‘entrepreneurised’, thoroughly. And there is an entire coterie of ‘Empire Loyalists’ on the Right in Australia, who predicate their declarations of eternal fealty to the never-ending US Empire on the USA becoming the ‘new Saudi Arabia’. How dare you interfere with their delusions.

  17. roger blanchard says:

    I’m sorry Mulga. The devil made me do it.


  18. Mulga Mumblebrain says:

    Yes-he’s been pestering me a good deal lately, too. Fortunately I have no self-restraint, so we get on famously.