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