US foot-dragging on LNG producing a scare scenario

Bob Tippee

The comforting feature of scare scenarios is that they seldom come true.

Scare scenarios extrapolate current trends into the future without accounting for likely but unpredictable adjustments.

They do, however, highlight disturbing tendencies—such as US foot-dragging in LNG development.

In the proliferation of LNG export projects planned around the world, a vital factor is expected growth in US demand for natural gas.

Without timely increases in US capacity to import LNG, however, a bottleneck could develop.

The US will need more LNG than it imports now. Rapid depletion and leasing restrictions limit domestic production. Imports from Canada's are declining. A pipeline from the Arctic won't soon fill the void.

At least 35 plans therefore have emerged for LNG import terminals in and near the US. That all or most of them ever would move beyond the planning stage never was in prospect.

Yet doubts grow that enough of those projects will be built to ensure that the US has the LNG import capacity it needs when it needs it.

Resistance to construction of LNG terminals is strong. It arises from safety fears, environmentalist opposition to increased gas use, and general aversion to industrial activity.

Elsewhere, export projects advance anyway.

If its terminal construction seriously languishes, the US won't absorb its expected share of LNG volumes entering trade. Hence the potential bottleneck. On the US side, gas prices likely would stay high; on the other side, they would slump.

An imbalance like this couldn't last. Demand would materialize for distressed LNG cargos. And supply would find its way into the high-priced US market. The pressure might accelerate construction of an arctic pipeline. It might even force some sense into federal leasing policy. Eventually, LNG import terminals would be built.

While those adjustments were in progress, however, US businesses would be paying more for energy than their international competitors, and US energy consumers would be suffering needlessly.

The questions would be how long the adjustments took and how much economic damage occurred in the meantime.

All because things didn't happen in the US when they should have. Scary.

(Author's e-mail: bobt@ogjonline.com)

Related Articles

Cheniere, Endesa sign Corpus Christi LNG deal

04/02/2014 Corpus Christi Liquefaction LLC, a subsidiary of Cheniere Energy Inc., has signed an LNG sale and purchase agreement (SPA) with Spanish multination...

Senate Republicans introduce energy amendment to jobs bill

04/02/2014 Three Republican members of the US Senate Energy and Natural Resources Committee introduced legislation that would approve the Keystone XL crude oi...

OGJ Newsletter

03/31/2014

International news for oil and gas professionals

LNG exports' immediate geopolitical impacts limited, senators told

03/31/2014

Direct geopolitical impacts from the US authorizing LNG exports more quickly would be limited, witnesses told a US Senate committee.

Careers at TOTAL

Careers at TOTAL - Videos

More than 600 job openings are now online, watch videos and learn more!

 

Click Here to Watch

Other Oil & Gas Industry Jobs

Search More Job Listings >>
Stay Connected