Sempra Energy's Cameron LNG LLC has joined the ranks of liquefied natural gas (LNG) export proposals that have received authorization to send liquefied gas to the limited number of countries that are party to a free trade agreement (FTA) with the United States.
Cameron LNG's existing LNG receipt and regasification facility is sited along the Calcasieu Channel in Hackberry, LA. Cameron now has authorization to export 1.7 Bcf/d of gas in gasified form to FTA countries for 20 years.
Project backers also are seeking from the U.S. Department of Energy's Office of Fossil Energy (DOE/FE) authorization to export to countries that are not party to an FTA agreement with the United States. After granting such authorization to Cheniere Energy's Sabine Pass Liquefaction LLC's LNG export project, DOE officials have said no more will be granted until an analysis of the impact of exports on the U.S. gas market is completed.
DOE/FE directed the Energy Information Administration (EIA) to perform such an analysis, the results of which it released Thursday. EIA found that LNG exports in the amounts contemplated by proposed export projects could increase domestic gas prices paid by residential, commercial and industrial customers by a range of 3-9% (see Daily GPI, Jan. 20). DOE/FE also is seeking an analysis by a private sector consultant of the market impact of exports. Results from that study of the macroeconomic effects of LNG exports is expected to be released later this quarter.
"The EIA study's predicted natural gas price increases do not account for increased economic activity, decreased U.S. trade deficit and increased job creation that we expect will be revealed in the forthcoming macroeconomic study on LNG exports," Bill Cooper, president of the Center for LNG, an advocate for LNG exports, said Friday. "GDP growth, job creation and offsetting the U.S. trade deficit would be beneficial in neutralizing any potential price effects. For example, the LNG industry expects each new export project to create thousands of jobs in the natural gas sector and related industries."
Consumer and commercial/industrial interests generally oppose gas exports for fear, as the EIA's study says, that gas prices would climb as the United States sends its energy overseas. A particularly vocal opponent of exports has been the Industrial Energy Consumers of America (IECA), which Thursday called on Congress to require that DOE do a gas and electricity price impact analysis on each LNG export proposal it receives.
"We encourage the Congress to change the law and require such studies," IECA said. "It is the only way to truly protect the interest of the public and make informed decisions on export applications."
The Natural Gas Supply Association (NGSA) struck a more moderate tone on the EIA report's findings. "EIA' s analysis should be kept in perspective," said NGSA President Skip Horvath. "The agency looked at a range of different scenarios, including some that are very unlikely. Although we disagree with some of its projections, EIA's analysis provides an opportunity for the natural gas industry to restate how well positioned it is to handle growing demand from electric, industrial and residential customers.
"Thanks to the shale revolution, the estimated size of the natural gas resource base has grown by 71% just between the years of 2000 and 2010."
Other projects that have received authorization to export LNG to FTA countries are:
Key countries with FTAs include Canada and Mexico, which engage in significant natural gas trade with the United States via pipeline. An FTA with South Korea, currently the world's second largest importer of LNG, which does not currently receive domestically produced natural gas from the United States, has been ratified by both the U.S. and South Korean legislatures but has not yet entered into force.
Other countries that are party to an FTA with the United States are: Australia, Bahrain, Chile, Dominican Republic, El Salvador, Guatemala, Honduras, Jordan, Morocco, Nicaragua, Oman, Peru and Singapore. Obviously, countries like Australia have their own natural gas and don't need any from the United States. But other countries do, and the ability to sell to them is seen by some energy analysts as a key requirement to moving U.S. export projects forward.
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