To send natural gas across the oceans, companies must supercool the fuel to minus 260 degrees and convert it to liquid form so it can be loaded onto tankers. Building massive coastal facilities to make liquefied natural gas requires multiple permits from Washington and states.
The Energy Department is looking at whether exports will drain U.S. supplies and inflate domestic prices. The Energy Information Administration, part of the department, is expected to deliver its analysis in a few weeks. If the department finds export terminals will raise the domestic price of natural gas and fail to serve the country's best interests, it could block applicants from exporting to most nations except those with free-trade agreements with the U.S. That could doom the projects.
Chemical companies would take a hti becuase they use natural gas as a raw material in car parts, bottles, cleaners, mattresses and other products. Dow Chemical, one of the most outspoken critics of the export proposals, says the U.S. would be better off using its cheap natural gas for domestic manufacturing instead of exports.
Energy companies say there is plenty of natural gas in the U.S. to meet domestic demand and support exports at the same time. They say building the giant export facilities would create construction jobs and boost long-term employment by encouraging a faster rise in U.S. natural-gas output.
While concern over price increases "gets the most airplay," the Energy Department is also examining potential benefits of exports, such as creating jobs and offsetting the large U.S. trade deficit.
Cheniere, which wants to start construction in 2012 on an export facility in Louisiana, is the only company to have cleared the Energy Department hurdle on exports. It got approval to export to most nations in May, before opponents had fully geared up to resist such plans. Cheniere has already signed long-term contracts to supply natural gas to the U.K.'s BG Group PLC, Spain's Gas Natural Fenosa and GAIL (India) Ltd.
Many companies that are seeking permission to export natural gas had planned to import it just a few years ago. Then U.S. production rose 18% between 2005 and 2010, with the bulk of the increase coming from gas trapped in rock formations known as shale. Import terminals are now gathering dust. Earlier this year, a terminal owned by Dominion Resources Inc. south of Baltimore had to buy a shipment of natural gas from overseas just to keep its equipment running.
With natural gas prices in the U.S. at multiyear lows, power companies can generate electricity more cheaply and pass the savings to consumers. (WSJ, 12/22/2011)