Boosting U.S. producers’ plans to export shale gas to the
energy-thirsty nations of Asia, the U.S. Department of Energy last month
approved a plan by Dominion Resources to build a natural gas terminal at Cove Point,
on the Chesapeake Bay in Maryland, to export up to .77 billion cubic
feet a day (bcfd) to Japan and India. Estimated at $3.8 billion, the
facility could start shipping gas in 2017, the company said.
Cove Point is the 4th U.S. facility to receive federal
approval to export liquefied natural gas (LNG) to countries that do not
have a free-trade agreement with the United States. According to Oil & Gas Journal, there are 19 other “non-FTA” export applications under review at the DOE.
The approval “is good news on many fronts,” Dominion CEO Thomas Farrell said in a statement,
“including the thousands of jobs that will be created, the boost in
government revenues that will result, and the support it provides to
allied nations.”
Good For Everyone
Indeed, the natural gas industry sees the coming boom in exports to
Asia as a windfall that will shore up the U.S. trade deficit, fuel a
long economic boom, usher in a new era of energy independence and
prosperity, and, who knows, maybe even end the conflict in the Middle
East. Earlier this month the Energy Information Administration
announced that it expects the U.S. to be the world’s leading exporter of petroleum products, including oil and natural gas, in 2013, surpassing Saudi Arabia and Russia.
While that’s good news for the U.S. energy sector and for the U.S.
economy in general, the brilliant scenarios being painted by natural gas
proponents obscure some less comfortable realities. For one thing, the
“Asia premium” ‑ the elevated price paid by countries in Asia Pacific,
particularly Japan and South Korea, the world’s two largest LNG importers
– is unlikely to last. “We do not want to pay the so-called ‘Asian
premium,’ and the shale gas revolution will play an important role in
narrowing that gap,” Jang Seok-hyo, CEO of Korea Gas Corp., told a Washington Post reporter at the 22nd World Energy Congress last week, in Daegu, South Korea.
Technology advances are likely to reduce the cost of liquefying and
transporting natural gas, and as more gas gets shipped overseas,
eventually, a globalized market of the sort that exists today for crude
oil will emerge, normalizing prices across regions and eliminating the
sharp cost advantage enjoyed today by U.S. producers. Being “the Saudi
Arabia of natural gas” is great, but you can’t expect importers to pay a
400% markup forever.
China Rising
At the same time, the big elephant in the Asian gas market, China, is
set to become a major producer of natural gas itself. According to the
EIA, China is second only to the United States in “technically recoverable natural gas,”
and while much of that gas is trapped in remote geological formations
even trickier to tap than the U.S. shale fields, the Chinese government
is clearly determined to recover it. In August officials at PetroChina,
the state oil and gas company, said they will accelerate domestic
production of natural gas, largely by tapping abundant shale reserves in
the interior. In the first 6 months of this year natural gas
production rose by 8.1% over the same period in 2012, and PetroChina
President Wang Dongjin said unconventional gas production will reach 2.7
bcfd by 2015, according to Platts.
Aided by foreign oil majors, China could even become a net exporter of
LNG. Chevron is expected to begin production from the massive Chuandongbei field, in Sichuan Province, next year, and expects to produce some 3 trillion cubic feet there over the next 20 years.
China’s natural gas industry is still likely to trail U.S.
production. But profits from the expected gas-export boom probably
shouldn’t be booked just yet.
http://www.forbes.com/sites/pikeresearch/2013/10/18/shale-gas-export-boom-dont-celebrate-yet/?ss=business%3Aenergy
No comments:
Post a Comment