The benefits of exporting natural gas
America is now the world蘑菇视频 largest producer of natural gas, providing our workers an important competitive advantage in the global market. Exporting natural gas to the rest of the world is providing America with many benefits, including lowering our foreign trade deficit, providing jobs for Americans and giving us more influence in the world.
Of course, many wonder if we export a lot of gas, will we have enough for domestic use and will prices go up. The U.S. Energy Information Administration (EIA) recently released the results of in-depth research to answer the question: will we have enough natural gas if we start exporting huge amounts? The EIA report titled 鈥淓ffect of Increased Levels of Liquefied Natural Gas Exports on U.S. Energy Markets鈥� finds that yes, we鈥檒l have more than enough natural gas to keep prices low here at home AND export huge volumes to other countries, with little adverse effect to pricing.
Natural gas is shipped and stored in liquid form, called liquefied natural gas or LNG. In order to become liquid, it must be stored at extremely low temperatures (-260掳 Fahrenheit). Once the LNG gets to its destination, it can be converted into compressed natural gas or CNG, by raising the temperature.
The U.S. Commerce Department mid-year trade report shows that the oil and natural gas industry continues to drive U.S. economic gains in 2015. The total U.S. trade deficit peaked at $762 billion in 2006, prior to the surge in U.S. oil and natural gas production. By 2014, it had dropped to $508 billion. The mid-year (June 30) trade report shows that the trade deficit among petroleum and petroleum products fell by 56.1 percent compared to the first six months of 2014.
Oil imports remain on the decline, and strong exports of petroleum and refined products are creating new opportunities to bring wealth and jobs back to America. That growth helped to hold the total U.S. year-over-year trade balance steady, despite a 23 percent increase in the trade deficit among non-petroleum products. Due to low commodity prices, the value of U.S. petroleum and petroleum product exports fell by $20.2 billion, despite high export volumes; but petroleum-related imports fell faster, down $78.6 billion compared to the first six months of 2014.
Congressman Bill Johnson, who represents eastern and southeastern Ohio, recently went on a trip to Portugal, Belgium and the Ukraine to discuss energy policy, specifically U.S. LNG exports. Johnson reported that during his meetings it became clear that America possesses the energy resources needed to influence global energy markets and provide a reliable trading partner to our allies around the globe 鈥� many of whom are beholden to the whims of Russian President Vladimir Putin for their energy needs.
He writes, 鈥淭he message from our European allies I met with, overwhelmingly, is that they are looking to the United States to take the lead in providing a reliable and secure source of natural gas. In fact, the high-ranking Ukrainian officials I spoke with indicated that boosting American natural gas exports would effectively contribute to cutting off Russia蘑菇视频 cash flow, thus greatly reducing their influence in the region. Additionally, officials from Spain and Portugal have said that they鈥檙e working on building the infrastructure needed to import and replace roughly 80 percent of Russian gas that Europe depends on.鈥�
Another importer of U.S. natural gas is Mexico. Natural gas exports to Mexico are surging. Mexico has long imported a small amount of natural gas from the U.S., but under a 2013 law, Mexico opened its electricity market to private investment and triggered a surge in demand for natural gas, which is projected to grow significantly over the next several decades. Most of natural gas exported to Mexico is piped to the country through pipelines. Exports of natural gas through new and expanded cross-border pipelines have nearly tripled from 2010 to 2015. And although LNG exports to Mexico are currently extremely small, LNG exports to Mexico is expected to surge and make up about 16 percent of US production by 2030.
In addition to exporting natural gas, one of Europe蘑菇视频 largest petrochemical companies, Ineos Olefins & Polymers, is beginning to export ethane to Norway and Scotland. You may recall reading in the August Mineral Rights Primer column, the pros and cons of ethane. Ethane is a by-product of the shale gas extraction process. It is valuable in the petrochemical market, but an expensive nuisance to shale natural gas production. Ethane蘑菇视频 -90掳 Celsius boiling point makes it costly to condense into a liquid state, required to carry it by ship. But U.S. supply of ethane, which comes out of natural gas wells, has doubled and prices have plunged 60 per cent from five years ago to $0.19 per gallon. U.S. energy companies and European and Asian petrochemicals makers have joined forces to build pipelines, tanks, giant refrigerators and specialized tankers to move surplus ethane overseas.
Congressman Johnson sums it up nicely when he writes, 鈥淚n addition to the significant geopolitical benefits we鈥檇 realize from exporting our excess LNG, doing so would also benefit American workers 鈥� it would create jobs here at home. The construction of new export projects is expected to put up to 45,000 unemployed Americans back to work by 2018, stimulating new investment in the energy and manufacturing industries and growing our economy here at home. At a time when many producers are slowing production and laying down rigs because domestic energy prices are so low, opening up export markets hungry for American energy would keep American workers on the job.鈥�
David Pearl is vice president of Infinity Resource Group, Inc., a professional mineral rights consulting firm, specializing in the leasing and sale of mineral rights in PA, WV and OH. He is also managing director of a natural gas fuel dispensing patent holding company and director of a natural gas fuel island development company. Your questions are welcomed by calling 412-535-9200 or by emailing IRGOilGas@gmail.com.