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US Competing with Canada to Export LNG


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]

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  • AD_Rtr_OS

    When it appeared that the US was suffering a severe shortage of NG, and imports were being considered, the “usual suspects” put up a howl and clamor over how dangerous LNG facilities were. They will repeat the same lies about constructing those facilities for export as they did for import.

  • Corlyss

    Our friendly neighborhood star sent us a little reminder of who’s the 800 lb. gorilla when calculating atmospheric effects on earth. Wish the AGW hysterics would take notice, but they won’t.

  • Atanu Maulik

    “Energy-intensive industries are lobbying hard in Congress to prevent American gas from going abroad..”_____What if the same argument is made about the products of those same industries ?

  • Thirdsyphon

    The “net positive effect” of increased LNG exports on the U.S. economy won’t be equally shared. To quote from the same report:

    “How increased LNG exports will affect different socioeconomic groups will depend on their income sources. . . Overall, both total labor compensation and income from investment are projected to decline, and income to owners of natural gas resources will increase.”

    We all have our own policy goals and priorities, but I’m personally a lot more concerned about “total labor compensation and income from investment” than I am about maximizing “income to owners of natural gas resources.”

  • vepxistqaosani

    Given the decades and tens of millions of dollars necessary to complete the various impact statements and litigation resulting therefrom, can’t an argument be made that we’re better off out-sourcing LNG plants to Canada?

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