As natural gas dips below two dollars, Sempra Energy Inc. says it will develop a $6 billion liquefied natural gas export terminal at its existing import terminal at Hackberry in southwestern Louisiana.
It’s the third LNG export terminal in the works for Louisiana. Cheniere Energy Inc. said late Monday that it has received permission from the Federal Energy Regulatory Commission to modify its import terminal at Sabine Pass in Cameron Parish for exports, making it the first large-scale U.S. gas exporter. Energy Transfer Equity LP has filed for federal permission to build an export facility at its import terminal at Lake Charles.In Canada, Kitimat LNG leads the race to open an LNG exporting facility in Canada with two others in the planning stages.
Why? Because natural gas fetches a higher price in Asia then it does in North America where the spot price was at $1.95 today. Japan is bracing for what may be its first summer without nuclear power as safety concerns after a tsunami triggered a nuclear crisis last year ensured that all its nuclear reactors, except for one, remain shut. Asian liquefied natural gas spot prices have risen to around $16 since hitting a low in mid-February as buyers continue to stock up on summer supplies.
Japan is committed to moving forward without nuclear power. The one remaining reactor, Hokkaido Electric’s Tomari No.3, is scheduled to go offline on May 5 for maintenance. Before the Fukushima nuclear plant disaster, about a third of Japan’s power came from nuclear utilities and the country has relied heavily on LNG to fill the nuclear gap, with February imports of the fuel up 23 percent year on year.
For the USA to become an exporter is simply driven by profit and not necessarily by policy or strategic interest. As oil continues to increase in price, and cost Americans more at the pump, the US must look to reduce consumption overall and provide valid alternatives to petro only power. As the biggest consumer of energy the US should seriously reconsider the long term benefits of exporting natural gas and not taking full advantage of this domestic energy source and its potential to offset imports of oil from those countries that do not share the same interests as the US.
The cost of gasoline will likely become a hot topic in the US presidential campaign as President Barack Obama seems to be trying to position himself as the defender of the middle class and the increasing energy costs they are dealing with now. Rising gasoline prices could threaten Obama’s political future, and in defence proposed new measures today to reduce oil market manipulation that are unlikely to get support from a divided Congress. A better solution may be to support natural gas and shale gas produces as well as encouraging increased use of natural gas in the American transportation system.
Canada on the other hand is better positioned to export natural gas surplus to Asia. The US use to be Canada’s largest customer, but as the US became the largest producer of natural gas in the world, it no longer needs to import from Canada. For Canada, its a matter of finding another customer to buy current and future surplus while also taking full advantage of natural gas as cheaper, cleaner energy alternative to oil and coal.
This year could be a pivotal time for the North American natural gas industry and who takes full advantage of this valued energy resource.
