The US is enjoying a glut of cheap natural gas, courtesy of the shale boom, but it has largely kept the benefits of this revolution to itself. America needs to build liquefaction facilities—places where natural gas is compressed into a liquid form more conducive to shipping overseas. The Obama administration has dragged its feet on the permitting process for these facilities, despite the fact that opening up this gas glut to exports would have a net positive effect on the American economy.Just as Canada has worked behind-the-scenes on pipeline alternatives in the event that President Obama nixes the Keystone XL project, America’s northern neighbor is eying the installation of its own LNG terminals on its Pacific coast. The WSJ reports:
[Gas] producers largely have divided up into two camps: One is betting on Canada’s industry-friendly federal government and its closer proximity to Asia. The other group is hoping already-developed infrastructure in the U.S. will outweigh political uncertainty in Washington over large-scale exports of the cheap fuel. […]The biggest economic impact will be in North America itself. The British Columbia government estimates that a single LNG plant will cost as much as $20 billion, creating 3,500 construction jobs and 200 to 300 permanent jobs. […]So far, the U.S. government has approved two projects for LNG exports—Freeport is one of them. A debate rages in Washington over whether to allow more. Some industry groups say the gas should stay on the continent, to ensure cheap energy for U.S. manufacturing and consumers.
This is a politically fraught issue. Energy-intensive industries are lobbying hard in Congress to prevent American gas from going abroad, fearing the inevitable rise in natural gas prices that will accompany these exports. We understand their fear, but our allies in Asia and Europe could benefit greatly from the global price stability that American gas exports would bring. And generally speaking, we’re in favor of a world more steeped in a free-trade mindset.In May, President Obama acknowledged that the US would likely become a net exporter of natural gas by 2020, and he signaled a willingness to start permitting these export terminals. But Canada, meanwhile, is eying a pipeline that would connect some of its undeveloped gas reserves in northern British Columbia and Alberta to its Pacific coast and has already begun permitting its own liquefaction facilities. North American natural gas, like the oil from Canada’s tar sands, is going to find its way to the global market one way or another. It makes more sense to build these facilities along America’s Gulf Coast than out along the much more remote coast of British Columbia. The US should get the ball rolling on LNG exports.[LNG carrier image courtesy of Wikimedia]