More natural gas export could raise prices

Natural gas and liquid natural gas (LNG) are used extensively in agricultural operations from the farm through ag industry operations; therefore, the high volume of LNG being produced in the U.S. is good for lower costs.

Natural gas production has expanded greatly from just a few years ago with the efficiency in which gas is being extracted from shale. There basically is a glut of natural gas, and manufacturers want to export more LNG.

It wasn’t that many years ago that the U.S. was an importer of LNG. The U.S. natural gas was mainly coming from Gulf of Mexico oil rigs.

Importing LNG meant the Department of Energy approved port regassification operations, but now those port operations are sitting idle, and the LNG manufacturers want to convert the regassification operations into liquification terminals.

The LNG industry isn’t concerned about the cost of the liquification in order to export LNG from the U.S. to the world because the profits are there to be grabbed.

“I understand that it is four to six times more expensive for a liquification compared to a regassification terminal,” said Marc Spitzer, a former commissioner at the Federal Energy Regulatory Commission, while talking to Monica Trauzzi, during an E&E (Environment & Energy) TV report.

The Sierra Club and some environmental groups are filing lawsuits to keep LNG export terminals from being approved by the Department of Energy. But as Spitzer explained, there is kind of a dilemma for various environmental groups.

“A fascinating aspect of the environmental issue is an interest by some environmentalists in moving away from the generation of electricity through coal, and approximately 48 percent of the power generated in the U.S. is by coal-fired generation, to move that more to natural gas. But then the environmental community is concerned about the environmental impact of shale (gas) production. So, it is sort of a Catch 22,” Spitzer told Trauzzi.

Approving a number of LNG export terminals is being looked at by Congress and government agencies. The evaluation is based on “what is in the best interest of the country,” Spitzer said.

With export probably comes higher prices for LNG in the U.S., but at what point do lower prices stymie the LNG industry, which might cut jobs and hurt the economy?

Apparently there are export markets for LNG and countries that will pay more than U.S. consumers, farmers and industry are paying at the moment. Increasing export terminals would definitely put the U.S. back into the world market for pricing of LNG or natural gas—back to the days of importing natural gas.