Quantcast

Natural Gas Prices Will Skyrocket if Frack Gas is Exported

Energy

Oil Change International

By Andy Rowell

Exporting LNG to Europe and the thirsty markets of Asia could be a sign of things to come.

The oil and gas industry has long argued that the fracking boom sweeping America will lead to an age of plenty where gas prices remain low indefinitely, energy is cheap and jobs are created.

But the oil and gas industry does not work in geographical isolation; it is an international industry. And increasingly the U.S. is looking to export frack gas as liquified natural gas (LNG).

Yesterday came the first of what could potentially be many deals. The British company Centrica announced that it had signed a $15 billion, 20-year, “landmark” agreement with Cheniere Energy Partners, which would allow it to export enough from the U.S. to supply just under 2 million British homes each year.

British Prime Minister David Cameron, welcomed the deal: “Future gas supplies from the U.S. will help diversify our energy mix and provide British consumers with a new long-term, secure and affordable source of fuel.”

Exporting LNG to Europe and the thirsty markets of Asia could be a sign of things to come. Indeed, in the Financial Times, Ed Crooks argues that more than 40 percent of the entire U.S. marketed gas production could be exported, if all the LNG applications go ahead.

He writes: “The U.S. Department of Energy has been sent applications from 21 proposed LNG projects for permits to export a total of 28.3bn cubic feet of gas per day: 41 percent of the entire marketed gas production of the U.S. last year.”

The rush to export has provoked a backlash, and Crooks argues that: “An increasingly vocal campaign is arguing for a go-slow in allowing U.S. shale production to be exported as liquefied natural gas.”

The reason for this is simple old economics of supply and demand. At the moment, there is a glut of U.S. gas, driving down prices, but if 20 or 30 percent is exported, this will reduce supply in the U.S. and raise prices. And if prices rise, investment will fall, further curtailing supply and further increasing prices.

One businessman, Peter Huntsman, chief executive of Huntsman chemicals who is advocating a slowdown in exports, cautions that “the U.S. price of gas would skyrocket,” if LNG exports are allowed to continue.

Indeed, there is now an industry-backed campaign called America’s Energy Advantage that is warning that billions of dollars of potential investment in U.S. industry could be at risk if the large scale LNG exports do indeed happen.

The group—which includes the heavy energy users such as Dow Chemical, Huntsman and Alcoa—is essentially calling for exports to be curtailed soon.

On the other side of the fence more than 100 members of Congress have signed a letter asking for the Obama administration to “advance without delay … toward approval of export permits.”

The oil industry has also attacked opponents of exporting natural gas. Earlier this month, Exxon Mobil Senior Vice President Michael Dolan told an energy conference in Houston that “It’s absolutely embarrassing for people in our industry at very high levels to make a case that’s blatantly to put money in their pocket.”

Writing on the Oilprice.com website yesterday, Kurt Cobb author of the peak-oil thriller, Prelude, argued that the pro-export drive of the oil industry “is to get higher prices for its product than customers in the United States can provide.”

But all may not be what they seem in the U.S. right now he argues. Cobb argues that, even without a massive export boom, that “U.S. natural gas production could actually start declining soon and send prices soaring … the present and the past suggest that the so-called shale gas revolution is about to be laid to rest.”

If Cobb is proved right, and that is a big if, Centrica may have just bet $15 billion on the wrong horse.

Visit EcoWatch’s FRACKING and LNG pages for more related news on this topic.

——–

Sign the petition today, telling President Obama to enact an immediate fracking moratorium:

 

EcoWatch Daily Newsletter

Pexels

By Gavin Van De Walle, MS, RD

Medium-chain triglyceride (MCT) oil and coconut oil are fats that have risen in popularity alongside the ketogenic, or keto, diet.

Read More Show Less
Pexels

By Bijal Trivedi

The Centers for Disease Control and Prevention (CDC) released a report on Nov. 13 that describes a list of microorganisms that have become resistant to antibiotics and pose a serious threat to public health. Each year these so-called superbugs cause more than 2.8 million infections in the U.S. and kill more than 35,000 people.

Read More Show Less
Sponsored
Rool Paap / Flickr / CC BY 2.0

By Franziska Spritzler, RD, CDE

Inflammation can be good or bad depending on the situation.

Read More Show Less

By Joe Vukovich

Under the guise of responding to consumer complaints that today's energy- and water-efficient dishwashers take too long, the Department of Energy has proposed creating a new class of dishwashers that wouldn't be subject to any water or energy efficiency standards at all. The move would not only undermine three decades of progress for consumers and the environment, it is based on serious distortions of fact regarding today's dishwashers.

Read More Show Less

By Emily Moran

If you have oak trees in your neighborhood, perhaps you've noticed that some years the ground is carpeted with their acorns, and some years there are hardly any. Biologists call this pattern, in which all the oak trees for miles around make either lots of acorns or almost none, "masting."

Read More Show Less
Sponsored

By Catherine Davidson

Tashi Yudon peeks out from behind a net curtain at the rooftops below and lets out a sigh, her breath frosting on the windowpane in front of her.

Some 700 kilometers away in the capital city Delhi, temperatures have yet to dip below 25 degrees Celsius, but in Spiti there is already an atmosphere of impatient expectation as winter settles over the valley.

Read More Show Less

The Dog Aging Project at the University of Washington is looking to recruit 10,000 dogs to study for the next 10 years to see if they can improve the life expectancy of man's best friend and their quality of life, as CNN reported.

Read More Show Less
Warragamba Dam on Oct. 23 in Sydney, Australia. Sydney's dams have been less than 50 percent full as drought conditions continue across New South Wales. Brook Mitchell / Getty Images

While Sydney faced "catastrophic fire danger" for the first time earlier this week, and nearly 130 wildfires continue to burn in New South Wales and Queensland, Sydney now faces another problem; it's running out of water.

Read More Show Less