In the space of six years, shale gas development has turned the U.S. energy world upside down, driving natural gas prices well below the $15/Mcf levels they reached following Gulf of Mexico hurricanes in 2005, former FERC Commissioner Marc Spitzer said Wednesday in a webcast interview on the industry program “OnPoint.”

Calling the development of the liquefied natural gas (LNG) export capability in the United States a much more complex undertaking than the import facility network that the Federal Energy Regulatory Commission nurtured in his six years there, Spitzer said ultimately the process involves a “fascinating mix” of environmental, economic and political issues. And it is all being debated now because of “the shale revolution.”

Natural gas supply development has moved from traditional exploration/development activities to a manufacturing process that has driven down prices to where some in the industry are talking $1.00/Mcf gas, according to Spitzer. He said that price would have been unthinkable when he became a commissioner in 2006. Previously Spitzer had been an Arizona state regulator and a state legislator.

Now a partner in the Washington, DC, law firm of Steptoe & Johnson LLP, Spitzer said he could not have imagined when he took office at FERC in 2006 that exports of LNG by the United States could be on the horizon given the conventional wisdom at the time that “we were going to be net long-term importers of natural gas.”

Spitzer said, “$1 natural gas at the Henry Hub would send shivers down the spines of anybody who’s involved in gas production.”

While the historically low prices and continuing excess supply have prompted some gas producers to push for exports, large industries that burn gas are fearful U.S. prices will escalate.

“It’s sort of a catch-22…the producers of natural gas have a glut of supply. Their processes have become so efficient they have almost become victims of their own success,” Spitzer said. “The efficiency has led to more supply than they can handle. So they’re looking for a way to increase demand for natural gas.”

Spitzer stressed that the Asian markets (Japan, China and South Korea) are fetching the highest prices for LNG and eventually the Gulf of Mexico (GOM) will have better access to those markets through a widened Panama Canal, lowering transportation costs for proposed export facilities along the Gulf Coast.

Ultimately, the U.S. Department of Energy, FERC and Congress will have to weigh in on the export issue, Spitzer said. He did not predict how it would turn out, but said environmental and economic concerns would have to be addressed.

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