This week, Bloomberg Energy published an article with comments from the White House about natural gas exports. I took a few moments to weigh in on the potential impact.
One key bullish factor in the natural gas markets is the potential for Liquefied Natural Gas (LNG) exports. Although such exports are not expected until 2015 and beyond, the discount of U.S. natural gas prices compared to much of the world makes eventual exports a real possibility. And consumers, especially large manufacturing and chemical operations, are fearful that exporting our cheap gas abroad could push prices higher, thereby taking away their energy advantage.
The pace of LNG export development is slow due to a combination of huge capital costs for the liquefaction facilities, lengthy construction cycles, and regulatory approvals at all levels from the federal down to the local level. That final issue has created a strong debate at the federal level between energy producers and users. Is there a cost or benefit of exporting natural gas via LNG? The impact of federal decisions could be huge – more than 20 terminals are on the drawing board awaiting approval, although few expect all of them to be built.
Stakeholders have been waiting and recent speculation is that a decision could be coming sooner than later. With gas production breaking new records, a decision may be favorable to supporters of increased exports.