Gas industry looking to generate more cash with exports

www.timesleader.com/news/Gas_industry_looking_to_generate_more_cash_with_exports_11-14-2011.html
November 14, 2011
ANDREW MAYKUTH The Philadelphia Inquirer
Department of Energy has received five applications from companies.

The shale-gas bonanza is fueling a hot competition among businesses that want to claim a share of what is promoted as an abundant long-term energy source.

T. Boone Pickens​ is pitching compressed natural gas as a cheap motor fuel. Electricity suppliers want gas to fire up new power plants.

And the chemical industry, which buys natural gas as a raw material for plastics, says fuel from resources like Pennsylvania’s Marcellus Shale​ could inspire a resurgence of U.S. manufacturing.

Now, another potentially large rival market for natural gas is emerging: Exports.

The Department of Energy has received five applications from companies that want to create terminals to ship liquefied natural gas (LNG) overseas. One application has been approved.

The natural gas industry, which is eager to sell more fuel, says overseas markets could generate billions of dollars in export earnings, improve the nation’s balance of trade and boost the economy in shale-gas  areas such as Pennsylvania.

“Exports represent a good opportunity for the United States,” said James J. Balaschak, a principal of Deloitte Services L.P., based in Philadelphia.

The five export facilities could ship up to 6.6 billion cubic feet of gas a day to foreign countries, about 10 percent of total current domestic U.S. consumption.

But some gas customers say exports will drive up domestic prices, mostly benefit gas producers and undermine a chief virtue of natural gas — energy independence.

Jim Collins, a representative of the American Public Gas Association, said at a Senate committee hearing last week that allowing natural gas exports would produce “predictable and disastrous” results for household consumers.

Collins, a utility official in Hamilton, Ohio, said “U.S. policymakers must carefully consider and prioritize the use of domestic resources according to the national interest over both the short and long terms.”

U.S. Sen. Jeff Bingaman, D-N.M., chairman of the Senate Energy and Natural Resources Committee, appeared to be sympathetic.

“How can we ensure that our export policy is consistent with our continued ability to reap the benefits of our newfound abundance of natural gas?” Bingaman said.

Just six years ago, the natural gas industry was scrambling to import LNG to meet America’s increasing demand.

But then came shale-gas production. The industry says the country is sitting on a 100-year supply.

Pennsylvania’s more than 4,000 Marcellus wells now produce more gas than the state consumes. With production expected to multiply, the industry is contemplating reversing the flow of pipelines that now carry natural gas from the Gulf coast to the Northeast.

Some senators expressed no fear that exports would harm the domestic market.

“We would perhaps sleep better at night, I’d hope, if we knew that our nation was again an energy exporter, and with a sufficient supply to comfortably remain an exporter while still doing productive things with plenty of our own supply here at home,” said Lisa Murkowski of Alaska, the committee’s ranking Republican.

Alaska is reconsidering plans to construct a pipeline that would carry its Northern Slope natural gas to the lower 48 states and is exploring the idea of exporting the gas instead to Asian markets.

But some are worried that a free market would too closely link domestic gas prices to international markets.

And others do not share the faith that U.S. shale-gas supplies are so robust.

“The history of the fossil-fuels industry is replete with miscalculations regarding supplies,” said Collins.