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LNG EXPORT: U.S. Gas Exports Put on Back Burner

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By TENNILLE TRACY

The Obama administration is telling Japan and other allied countries they will have to wait before moving forward on plans to buy American natural gas, people involved in the talks said.

A dramatic increase in U.S. natural-gas production has led several U.S. companies, including Sempra Energy SRE +0.23% and Dominion Resources Inc., D +0.15% to seek permits from the Department of Energy to export gas to countries that lack free-trade agreements with the U.S. Exxon Mobil Corp. XOM -0.73% Chief Executive Rex Tillerson said Wednesday his company was looking at exporting from the U.S. Gulf Coast and Canada.

Sempra and Dominion are working with Japanese partners that want to import the gas as their country looks for new power sources. The U.S. currently exports relatively small amounts of natural gas via pipelines to Canada and Mexico, but a wave of recent export proposals marks the first time in decades that companies have sought to liquefy U.S. gas and transport it overseas.

But exports have become a hot-button topic for some lawmakers in Washington and have highlighted uncertainty about what kind of energy power the U.S. wants to become as companies unearth huge supplies of natural gas in shale rock.

“We are going to have to answer some basic questions about our role as a producer,” Michael Levi, a senior fellow at the Council on Foreign Relations, said. “The fact that some of these debates have been so difficult stems from their novelty.”

Japan’s prime minister raised the gas-export issue with President Barack Obama at an April 30 meeting, one of several occasions on which Tokyo has pushed the administration.

But the U.S. has told Japan, a leading military ally in the Pacific, it will have to wait, in large part because of the political sensitivities, participants in the talks said.

“I think it’s going to require more people taking a look at it,” an administration official said, adding, “We’re very sympathetic to Japan. They’re in a very difficult situation.”

Following the disaster at its Fukushima Daiichi nuclear plant last year, Japan pulled the plug on all of its nuclear reactors, forcing it to replace a power source that generated about 30% of its electricity. The government is studying whether to restart some of the reactors, but nuclear power is likely to play a smaller role in five or 10 years.

That is when the U.S. natural gas could start arriving, but only if the U.S. grants permits to export terminals that would liquefy the gas for shipping across the Pacific.

Japan isn’t the only country waiting. “The requests come from everywhere,” the administration official said. Natural gas is much cheaper in the U.S. than in Europe and Asia, where the fuel’s value is often tied to the price of oil. Companies importing American gas would be able to reduce costs with contracts tied to the lower U.S. prices.

Mr. Tillerson laid out the case for exports at Exxon’s shareholder meeting Wednesday, saying they would create jobs and help the U.S. trade balance. Sen. Lisa Murkowksi, a Republican from Alaska, asked President Obama in April to expedite permits for natural-gas exports. She said exports could give Alaska a market for gas from its North Slope, which lacks a gas pipeline to the lower 48 states.

Opponents, including Rep. Ed Markey of Massachusetts and some other congressional Democrats, say the U.S. could boost its energy security by keeping its natural gas at home. Oil-and-gas entrepreneur T. Boone Pickens, in an interview, objected to the idea of selling the gas at a discount to global prices. “You’re kind of giving your own stuff away, and it’s stupid to do that,” said Mr. Pickens, who wants U.S. trucks to use natural gas.

Japanese officials said they recognized the Obama administration’s political challenges.

“It is difficult for the U.S. to say yes [to exports] because of the presidential election,” said Hirohide Hirai, director of the petroleum and natural-gas division of Japan’s economy ministry. “There won’t be any deal with any country before November.”

U.S. officials say they are weighing how exports would affect job creation, trade and the domestic price of natural gas. A price spike would hurt consumers and weaken a competitive advantage enjoyed by U.S. manufacturers that use natural gas as a raw material. An Energy Department assessment is due later this year, and an administration official said decisions will follow in a “timely manner.”

—Mitsuru Obe and Isabel Ordonez contributed to this article.

Write to Tennille Tracy at tennille.tracy@dowjones.com

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USA: Sempra Wins DOE Approval for Cameron LNG Export

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The U.S. Department of Energy granted Sempra a long‐term authorization to export up to the equivalent of 1.7 Bcf/d of natural gas as LNG to FTA countries for 20 years from the proposed Cameron, Louisiana, LNG liquefaction plant.

The ruling paves the way for a second approval allowing Sempra to export LNG to all LNG import nations, with or without U.S. free trade agreements.

Cameron LNG is situated on a 260-acre industrial-zoned site along the Calcasieu Channel in Hackberry, Louisiana. It is located 18 miles from the Gulf of Mexico and within 35 miles of five major interstate pipelines that serve nearly two-thirds of all U.S. natural gas markets.

The $900 million LNG terminal is currently capable of processing up to 1.5 billion cubic feet of natural gas per day.

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USA: Sempra Files with DOE to Export LNG from Cameron Terminal

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Sempra Energy has become the sixth US company, and fourth in the US Gulf, with formal intentions to export US natural gas as LNG, having filed a request with US regulators on Thursday to send out 12 million tonnes per annum (mtpa) from its existing Cameron LNG site.

The California-based company asked the US Department of Energy (DOE) for consent to send up to 1.7 billion cubic feet (bcf)/day (0.05 million cubic metres/day) to free-trade-friendly countries for 20 years.

Sempra said the Thursday document was the first in a two-part process, with a request to export to non-free-trade nations to follow.

The subsequent application to export domestic LNG to non-FTA countries will require an analysis of the public interest, and Cameron LNG will provide additional evidence regarding the public interest as part of that application,” Sempra said in the DOE filing.

Sempra’s export intention brings the total amount of conceived large-scale liquefaction in the lower 48 US states to more than 67mtpa.

Sempra’s DOE application follows the company’s previously announced plans to proceed with a liquefaction facility at its 1.5bn cubic feet (bcf)/day Cameron LNG import terminal in Cameron Parish, Louisiana.

Sempra CEO Debra Reed said during a quarterly earnings call on 4 November that the company had received strong interest from “large, credit-worthy counterparties” seeking liquefaction services from Cameron LNG on a long-term contract basis.

Sempra provided no commercial details in its DOE filing.

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Source –  LNG World News

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