Britain To Build A ‘National Flagship’ To Promote Maritime Trade
by Alistair Smout (Reuters) – Britain is to build a new flagship to promote its business and trade interests around the world, the government said on Saturday, in a move it...
HOUSTON–Golden Pass Products LLC, a joint venture between Exxon Mobil Corp. (XOM) and Qatar Petroleum, is asking federal authorities for permission to export large quantities of liquefied natural gas made in the U.S. from an existing terminal in Louisiana, an executive said Friday.
If permission is granted, Exxon, the biggest natural-gas producer in the country, and its partner would spend $10 billion converting a recently finished terminal built to import natural gas into a facility capable of exporting 15.6 million tons of LNG a year, or approximately 2 billion cubic feet a day. The U.S. produces about 72 billion cubic feet of natural gas a day.
The move acknowledges the dramatic shift in energy markets produced by the development of techniques to extract natural gas from shale formations across the U.S. After years of fretting about natural gas scarcity and spending billions constructing import terminals to bring the fuel from places as far as Qatar and West Africa, energy companies now seek to turn the U.S. into a major energy exporter.
“The market changed from what we originally envisioned,” said Bill Davis, Project Executive for Golden Pass Products. “Something changed along the way–it was the discovery of vastly significant gas resources.”
The joint venture’s application is for export to countries with which the U.S. has a free-trade treaty; it says it will submit an additional application for countries that haven’t signed free-trade agreements with the U.S. soon. Mr. Davis said it could take several years to get regulatory approval and up to five years to build the liquefaction facilities at the terminal.
A rival company, Cheniere Energy Inc. (LNG), already has authorization to ship LNG worldwide from a terminal near Exxon‘s Golden Pass Facility. But Exxon‘s application puts its heft behind the controversial drive to export U.S. natural gas. Proponents say exports will boost the U.S. economy and create jobs, while critics charge that exporting will raise prices for domestic consumers and lead to greater use of the drilling method known as hydraulic fracturing, which some environmentalists fear could cause pollution.
U.S. natural gas producers, straining under a collapse in domestic prices, have hoped for the chance to sell natural gas to overseas markets where prices can be much higher. As new drilling technology helped unlock increasing amounts of natural gas, prices plummeted to $1.90 per million British thermal units in April from nearly $14 per million British thermal units in July 2008.
Natural gas futures for September delivery closed Friday at $2.719 per million British thermal units, down 0.5 cent, or 0.2%, as traders worried that excess supply would continue despite a drop in the number of rigs drilling for natural gas. The U.S. produces about 72 billion cubic feet a day of natural gas.
Customers from the U.K., South Korea, India and Spain have already contracted supply from Cheniere. The company, which recently gave the order to start building the facility, expects to start deliveries in 2015.
– Angel Gonzalez and Ben Lefebvre, (c) 2012 Dow Jones & Company
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