Houston-based Cheniere Energy on Monday cleared the final major hurdle to exporting natural gas when federal regulators approved the firm’s plan to build a plant in southwest Louisiana for liquefying the fuel.
The decision by the Federal Energy Regulatory Commission puts Cheniere on track to convert its existing Sabine Pass terminal for receiving liquefied natural gas by 2015 — a timeline that would make it the first LNG export facility in the lower 48 states. One operates now in Alaska.
The company aims to export up to 3.5 million tons per year from the facility in Lake Charles, La. Cheniere plans to build the liquefaction plant in two stages, adding 191 acres to the existing terminal’s space. The facility would still be able to receive liquefied natural gas from tankers.
“Obtaining approval from the FERC is one more milestone for our liquefaction project,” said Cheniere CEO Charif Souki. “We will now finalize the financing arrangements in order to commence construction.”
About half a dozen other companies, including Texas-based Freeport LNG, also are pursuing exports to take advantage of the glut of natural gas produced in the U.S. using horizontal drilling and hydraulic fracturing techniques that free hydrocarbons from dense shale rock formations.
Exports would allow natural gas producers and processors to capitalize on higher prices globally compared to the United States. In the U.S. Monday, natural gas futures settled just over $2 per million British thermal units after hitting 10-year lows last week.
In Cheniere’s case, the strategy is a bid to put its receiving terminal to work. The Sabine Pass terminal went online in 2009, just as U.S. natural gas production surged and killed the need for LNG imports.
When natural gas is cooled to 256 degrees below zero it becomes a liquid that tanker ships can transport. At its destination it is converted back into gas. Cheniere’s Sabine Pass terminal is outfitted with regassification and storage equipment now.
In approving Cheniere’s liquefaction plant plans, FERC also could also give a boost to U.S. producers with big natural gas portfolios.
But a rise in natural gas prices would increase consumers’ monthly bills and also would be bad news for chemical manufacturers that use natural gas as a building block to create other products.
Congressional Democrats have proposed legislation that would ban new LNG exports. Rep. Ed Markey, D-Mass., who is pushing a ban, said the expert terminals would mean sending U.S. natural gas to China and Europe 00 and “exporting our manufacturing jobs abroad along with the fuel.”
“America should exploit her competitive advantage with lower natural gas prices to create jobs in the United States, not export natural gas to create more profits for oil and gas companies,” Markey said.
And environmentalists have asked top Obama administration officials to require a broader review of the consequences of the surge in natural gas drilling that probably would result from selling the fuel overseas.
Critics fear hydraulic fracturing can contaminate water supplies and cause localized earthquakes. Sierra Club Executive Director Michael Brune said in a statement Monday that exports would increase production and hydraulic fracturing, “making a dirty fuel more dangerous and putting more American families in at risk.”
- USA: Cheniere to Raise Up to USD 4 Billion in Debt for Sabine Pass Liquefaction Project (mb50.wordpress.com)
- USA: Cheniere Urges FERC to Approve Sabine Pass Liquefaction Project (mb50.wordpress.com)
- Will the US Become the World’s Largest Exporter of LNG? (appliedagrotech.net)
- USA: Cheniere CEO Sees Domestic Gas Prices at USD 2/MMBtu (mb50.wordpress.com)
- Cheniere: Sabine 1,2 Train Construction Start in H1 2012 (USA) (mb50.wordpress.com)
- USA: Cheniere, KOGAS Ink Sabine Pass LNG Deal (mb50.wordpress.com)
- USA: Sabine Pass LNG Gets Cargo (mb50.wordpress.com)
- Cheniere sees summer application for Corpus plant (appliedagrotech.net)
- Why America’s Missing Out on the Billion-Dollar Global LNG Game (mb50.wordpress.com)
In a move that further exemplifies why we must redirect our government in order to restore our economy, U.S. Rep. Ed Markey has decided to fight the law of supply & demand. His consistent failure to understand basic economics damages our economy – in this instance, by stifling job creation and energy independence.
In a letter to Energy Secretary Steven Chu, Markey questioned the impact of allowing U.S. companies to export liquefied natural gas with the following statement:
‘I am worried that exporting America’s natural gas would raise energy costs for American consumers, reduce the global competitiveness of U.S. businesses, make us more dependent on foreign sources of energy, and slow our transition away from dirtier fuels.’
This statement is another example of how career politicians like Markey are holding our economy back. Recent advances in natural gas exploration have brought us to the point of oversupply in the U.S. market. This situation provides a unique opportunity to be a net energy exporter for LNG (liquefied natural gas). Being at a point of oversupply means that we have reached our capacity to consume LNG domestically. Mr. Markey’s proposal to artificially inhibit exports will yield the precise outcome that he allegedly wants to avoid; namely, reducing the global competitiveness of U.S. businesses.
Last year, in an $8 billion 20-year deal, the Energy Department approved the first application by Cheniere Energy to export LNG to the UK. This is a step in the right direction. Other countries will start sending their money to us instead of us sending our money overseas.
Natural gas is cleaner than oil. It is also more abundant than oil in the United States and it provides an excellent vehicle for job creation. As we speak, many LNG import sites across the U.S. largely sit idle as exporters (to the U.S.) shift their LNG supplies to emerging markets that will pay a premium for natural gas. Among the sites built on the anticipation of large LNG imports is SUEZ Energy North America located in Everett.
SUEZ is a natural gas importer and large contributor to Mr. Markey’s campaign.
Now imagine if the Everett LNG import site became an export site. Imagine hundreds of workers becoming employed in the conversion process from importer to exporter. Imagine job growth in and around Boston if it became a hub for energy exports, with every tanker that passes through Boston harbor another reminder of economic growth here in America. This isn’t a far fetched concept.
Right now, Dominion Resources Inc (D.N) is considering plans to build a liquefied natural gas export plant on the site of its existing import terminal at Cove Point, Maryland, by 2015. Southern Union Co. is launching similar plans at their Lake Charles, La., LNG import terminal as well.
What is standing in the way? Rep. Markey.
Career politicians like Markey (who was elected in 1976, the year I was born) are fundamentally incapable of grasping the negative effects of blocking incredible opportunities such as these.
In addition to his myopic view of energy development here in the U.S., Markey is engaged in a serious conflict of interest by sitting on both the House Energy and Commerce Committee and the Natural Resources Committee, attempting to regulate the energy industry while accepting campaign contributions from its lobbyists.
Besides SUEZ Energy, Markey has accepted contributions from Chesapeake Energy, Interstate Natural Gas Assn of America, Spectra Energy and Washington Gas Light Co., all companies within the natural gas sector.
Accepting contributions from these companies is not illegal, but threatening them with adverse legislation, application delays or public scorn is tantamount to a shakedown. This is just the latest demonstration of Markey’s questionable ethics. There are numerous others, including examples relating to the solar and telecommunications industries.
For the sake of our national economy, and to help the hard working men and women who are struggling to find a job in Massachusetts’ 5th District and across the country, it is high time that we voted Markey out of office. I look forward to being the candidate to make it happen.
Semon (pronounced Simone) is a candidate for Congress in 5th Congressional District. A graduate of the University of Massachusetts, Amherst – School of Management, Semon is a senior business analyst. He and his wife Nicole live in Lexington and recently had their first child Eleanor in December.
- Thank Ed Markey for opposing natural gas exports by EARTHWORKS (socialactions.net)
- Democrats debate amongst themselves: Should we curb natural gas exports? (hotair.com)
- An emerging player (mb50.wordpress.com)
- BW Gas, InterEnergy Form JV to Build LNG Terminal in Dominican Republic (mb50.wordpress.com)
- USA: Cheniere Plans Corpus Christi LNG Export Terminal (mb50.wordpress.com)
- Alaska Governor, BP, Conoco and Exxon Discuss LNG Export (mb50.wordpress.com)
- Markey attacks gas exports in bid to hurt coal – and help chemicals? (junkscience.com)
- Angola LNG Looks to Sell Liquefied Natural Gas to Non-U.S. Buyers (mb50.wordpress.com)
- Lithuania: Cheniere Eyes LNG Exports by 2015 (mb50.wordpress.com)
- Natural gas glut fuels export debate (mysanantonio.com)