Asian Markets Could Create Opportunity for U.S. LNG Exports

By Terry-Cobo, Sarah | THE JOURNAL RECORD, May 11, 2012 | Go to article overview

Asian Markets Could Create Opportunity for U.S. LNG Exports


Terry-Cobo, Sarah, THE JOURNAL RECORD


In the wake of the magnitude 9.0 earthquake in Japan in March 2011, a tsunami overwhelmed and shuttered the Fukushima nuclear power plant. That natural disaster, combined with a nuclear disaster, killed more than 10,000 people with more than 10,000 missing. These simultaneous disasters brought the country's economy to a standstill, sending ripples throughout global supply chains in electronics and auto parts. As Japan continues to recover more than a year later, there is an opportunity for global energy markets to meet the country's oil and gas import needs.

According to the Centre for Global Energy Studies, nuclear power supplied nearly one-third of Japan's electricity prior to 2011. Since the Fukushima disaster, the number of operating nuclear power plants has dropped from 54 to just two, according to National Public Radio. If those power plants stay offline, the demand for oil will grow more than 10 percent in 2012, and the natural gas demand will grow more than 16 percent, according to the country's Institute of Energy Economics.

There is one liquefied natural gas export terminal in the United States, in Kenai, Alaska, according to the Energy Information Administration. And as recently as a decade ago, companies were looking to import natural gas. Recent advances in horizontal drilling and hydraulic fracturing have reversed that trend. Now the price for natural gas is at a decade low, near $2 per thousand cubic feet, due in part to an unusually warm winter. One possible source of demand is foreign markets.

But in order to export natural gas to Japan or to other continents, it must be converted to liquefied form. Building export terminals is an expensive and lengthy process. But a recent approval for the country's first large-scale natural gas export terminal has led one LNG industry group to believe that gas producers in North America are ready to capitalize on the export market.

Houston-based Cheniere Energy Inc. received a permit in April to build an export facility, and expects the terminal in Cameron Parish, La., to come online by 2016, according to the Associated Press. According to the Energy Department, the agency is reviewing six more permits for LNG export facilities and four more are pending agency approval.

"The Energy Department is currently undertaking a two-part study to comprehensively assess the economic impacts of increased natural gas exports, including natural gas price and supply, the impact on U.S. gross domestic product and economic growth, balance of trade, job creation, and other considerations that are of interest to consumers and the economy," Jen Stutsman, spokeswoman for the agency, said in an email message to The Journal Record.

The approval of Cheniere's permit, along with the company's sales purchase agreements, are a sign of positive growth, according to the Center for Liquefied Natural Gas.

"LNG export in North America is now a tangible reality and is poised for significant commercial success," the industry group said on its website in a post promoting an upcoming export forum.

According to the group's website, the export forum, scheduled in Houston from May 16 to 18, will feature buyers from the Asia- Pacific markets as well as European markets. …

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