Natural Gas Price May Go Up# Stock
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Natural gas export debate grows
Simone Sebastian, Houston Chronicle
Tuesday, January 17, 2012
Debate is brewing over whether to keep the nation's glut of natural gas at
home for cheap energy or export it at five times the price, possibly
creating jobs and boosting the domestic economy.
Businesses that purchase natural gas for industrial and residential use have
rallied against proposals to liquefy and export the fossil fuel to Asian
and European nations willing to pay much higher prices.
Nine companies have sought federal approval to export about 10 billion cubic
feet of liquefied natural gas per day, which would boost prices for U.S.
customers.
Cheniere Energy's Sabine Pass LNG plant in Louisiana already has won
approval to ship out more than 2 billion cubic feet of liquefied natural gas
a day.
In total, the proposed export volume equals about 14 percent of the natural
gas produced in the United States - 26.8 trillion cubic feet in 2010,
according to the U.S. Energy Information Administration. The United States
consumed about 23.8 trillion cubic feet.
There's little doubt that exports will cause the price of natural gas to
rise. The debate is whether the rise in gross domestic product and gas field
employment might offset the negative effects of higher domestic energy
prices.
"I don't think anybody knows the answer to that question, which we think
argues for slowing down these (export) facilities," said Dave Schryver,
executive vice president of the American Public Gas Association, a trade
group for municipal gas utilities.
"Until you have a strong, accurate view of what the impact is going to have
on consumers, it's premature."
The price of natural gas in the United States has plummeted as technology
has made it economical to extract natural gas from dense shale rock.
Natural gas futures closed at $2.67 per million British thermal units in
trading Friday on the New York Mercantile Exchange. The price was more than
$15 in 2005.
"We have so much natural gas coming up that we don't know what to do with it
," said Andrew Ware, spokesman for Cheniere Energy, based in Houston.
Except, maybe, ship it overseas.
Natural gas is selling for as much as $12 per million Btu in Europe and as
high as $18 in some Asian markets, said Ira Joseph, executive director for
international gas at consulting firm PIRA Energy Group.
Cheniere and other LNG companies have said that allowing natural gas exports
from the Gulf Coast would create jobs by encouraging more drilling.
The Energy Information Administration is expected to issue a report this
week examining the price effects of exports.
A second report in March will examine how the proposed exports would affect
the broader U.S. economy on job creation and gross domestic product, said
Bob Corbin, director of the office reviewing the applications.
It's not clear when the Energy Department will decide on the pending export
permits, because the nation previously hasn't had to contemplate exporting
natural gas on this scale, Corbin said.
The country has exported some gas since the 1960s, when Conoco's Alaska LNG
plant began shipments to Japan.
But the Sabine Pass terminal, along with other LNG facilities seeking
federal approval, represents the first effort to export it from the Lower 48
states.
That worries companies that buy natural gas for home heating and factories.
"If you create this highway that makes it easy for natural gas to flow to
where the price is highest, that would make natural gas prices higher here,"
said Schryver, of the Public Gas Association.
Price is one factor in considering export permits, Corbin acknowledged, but
the chief concern is supply.
"If there wasn't enough gas to support both domestic demand and exports,
that would be enough to disqualify the application," Corbin said.
Simone Sebastian, Houston Chronicle
Tuesday, January 17, 2012
Debate is brewing over whether to keep the nation's glut of natural gas at
home for cheap energy or export it at five times the price, possibly
creating jobs and boosting the domestic economy.
Businesses that purchase natural gas for industrial and residential use have
rallied against proposals to liquefy and export the fossil fuel to Asian
and European nations willing to pay much higher prices.
Nine companies have sought federal approval to export about 10 billion cubic
feet of liquefied natural gas per day, which would boost prices for U.S.
customers.
Cheniere Energy's Sabine Pass LNG plant in Louisiana already has won
approval to ship out more than 2 billion cubic feet of liquefied natural gas
a day.
In total, the proposed export volume equals about 14 percent of the natural
gas produced in the United States - 26.8 trillion cubic feet in 2010,
according to the U.S. Energy Information Administration. The United States
consumed about 23.8 trillion cubic feet.
There's little doubt that exports will cause the price of natural gas to
rise. The debate is whether the rise in gross domestic product and gas field
employment might offset the negative effects of higher domestic energy
prices.
"I don't think anybody knows the answer to that question, which we think
argues for slowing down these (export) facilities," said Dave Schryver,
executive vice president of the American Public Gas Association, a trade
group for municipal gas utilities.
"Until you have a strong, accurate view of what the impact is going to have
on consumers, it's premature."
The price of natural gas in the United States has plummeted as technology
has made it economical to extract natural gas from dense shale rock.
Natural gas futures closed at $2.67 per million British thermal units in
trading Friday on the New York Mercantile Exchange. The price was more than
$15 in 2005.
"We have so much natural gas coming up that we don't know what to do with it
," said Andrew Ware, spokesman for Cheniere Energy, based in Houston.
Except, maybe, ship it overseas.
Natural gas is selling for as much as $12 per million Btu in Europe and as
high as $18 in some Asian markets, said Ira Joseph, executive director for
international gas at consulting firm PIRA Energy Group.
Cheniere and other LNG companies have said that allowing natural gas exports
from the Gulf Coast would create jobs by encouraging more drilling.
The Energy Information Administration is expected to issue a report this
week examining the price effects of exports.
A second report in March will examine how the proposed exports would affect
the broader U.S. economy on job creation and gross domestic product, said
Bob Corbin, director of the office reviewing the applications.
It's not clear when the Energy Department will decide on the pending export
permits, because the nation previously hasn't had to contemplate exporting
natural gas on this scale, Corbin said.
The country has exported some gas since the 1960s, when Conoco's Alaska LNG
plant began shipments to Japan.
But the Sabine Pass terminal, along with other LNG facilities seeking
federal approval, represents the first effort to export it from the Lower 48
states.
That worries companies that buy natural gas for home heating and factories.
"If you create this highway that makes it easy for natural gas to flow to
where the price is highest, that would make natural gas prices higher here,"
said Schryver, of the Public Gas Association.
Price is one factor in considering export permits, Corbin acknowledged, but
the chief concern is supply.
"If there wasn't enough gas to support both domestic demand and exports,
that would be enough to disqualify the application," Corbin said.