In response to criticism that the DOE terminal approval process is hindering the U.S. from competing globally, Energy Secretary Moniz insisted that the Obama administration is “working hard” to evaluate companies’ bids to broadly export U.S. natural gas at an August 1 press conference.
The Energy Department gave conditional approval to Freeport LNG’s plans to widely export liquefied natural gas from a Quintana Island, Texas facility in May. Now it is vetting an application by Southern Union Company subsidiaries, which asked for permission to export 2 billion cubic feet per day of natural gas liquefied at a plant proposed for Lake Charles, La.
(Update: The Lake Charles site became the third approved LNG export terminal as of August 7.)
As U.S. facilities begrudgingly await their approvals, the world is seeing Japan, the world’s top LNG importer, decrease its demand and Canada upping the ante on beating the U.S. to the export game.
With the potential for a single export terminal to contribute $73 billion to net GDP growth per year (including up to $30 billion in federal, state and local tax revenues*), the heat is on Secretary Moniz and the DOE to maximize the U.S. energy advantage and approve the backlog of 20 applications awaiting approval.
Currently, domestic natural gas prices in the U.S. are considerably lower than gas prices in other parts of the world. The Henry Hub price, which is the U.S. benchmark, is approximately $4 per MMBtu (million British thermal units). The price in Japan has been as high as $16-18 per MMBtu, while $9-10 per MMbtu is more the norm in Europe. Liquefaction of natural gas is an expensive process, however. The construction of facilities, the cooling and transportation of the gas, and the regasification all narrow the gap between U.S. and world prices. Despite these costs, a business opportunity remains.
For Mississippi, with an import terminal in Pascagoula, the question is will the state play a large role in the energy export economy or not? The Mississippi terminal filed an application 11 months ago. If approved, construction would take six and a half years to complete and would require 1,813 full-time jobs.
*Source: American Petroleum Institute, U.S. LNG Exports: Impacts on Energy Markets and the Economy http://www.api.org/~/media/Files/Policy/LNG-Exports/API-LNG-Export-Report-by-ICF.pdf
As the developing countries like China and India continue to consume more energy at a staggering rate, U.S. energy policy should consider long-term supply needs as a matter of economic competitiveness and national security. Developing countries continue to expand industry and add power production while also transforming their economies to look more like the United States, with passenger cars and computers and televisions in homes. The amount of energy required to support this is almost incomprehensible.
Daniel Yergin of IHS recently gave his perspective on meeting the world’s future energy needs. With a possible increase of 30 to 45 percent by 2030, Yergin points out that, ”the challenges of meeting rising energy needs in the decades ahead, of assuring that the resources are available on a sustainable basis to support a growing world, may seem daunting; and, indeed, when one considers the scale, they truly are.”
Also interesting are Yergin’s thoughts on technology. He observes that, while technology will likely alter the dynamics, technology in energy has required long lead times. Yergin also recognizes the way we use energy, the progress made in energy efficiency, and the necessity of greater efficiency ahead.
Today’s economy is truly a global economy. Meeting the world’s energy demands is an opportunity for resource-rich and manufacturing-friendly Mississippi, but attention to our own needs is also critically important. Investment in a diversity of long-term energy assets is the right policy for Mississippi. Additionally, demand will necessitate activity in technology development and deployment, which yields high quality local development opportunities.
The bottom line: The global energy economy will be ever-growing. Opportunity to attract investment and jobs will persist. Mississippi developers should be focused and aggressive in this sector.
Navy Secretary Ray Mabus has set a goal of reducing the Navy’s dependence on fossil fuels by half by 2020. Read the article here.
For decades, politicians have talked about goals of energy growth, independence, and diversity, and today’s political rhetoric is not much different than in years past. While inaction in many areas is the same, what is different today is the aggressive regulatory action taken by Federal agencies, particularly the EPA, that is negatively impacting the availability and cost of energy.
To be clear, reasonable regulations are both necessary and beneficial in setting clear standards in business, and a healthy environment and a healthy economy are inextricably related because a healthy economy will foster technology development and other innovations that cut pollution and improve the environment (Google ‘Environmental Kuznets Curve’). Therefore, in order to promote both the economy and the environment, regulatory costs and economic benefits must be carefully considered together. Looking at recent and ongoing regulatory actions within EPA and other Federal agencies, it is clear this Administration is not consideringcosts and is on a path, through a myriad of regulatory moves with either insignificant environmental benefit or none at all, to try and diminish or stop the use of coal, an affordable and tremendously abundant U.S. energy resource.
With the surge of shale oil and natural gas production in the U.S. along with conventional energy reserves, the U.S. is the richest energy country in the world. This is an enormous economic advantage for our country but only if we useall our resources efficiently, especially our most affordable resources.