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US Gas Ready for World Domination


Thanks to fracking, the US has plenty of cheap natural gas. In fact, it has so much that it’s now planning the construction of new liquefied natural gas (LNG) export facilities (just last decade the US was looking to build more LNG import infrastructure). Last month, the Obama administration approved plans for America’s third LNG export terminal, and a dozen or so similar facilities are just waiting on the permits before they break ground themselves. The demand for American gas is high, thanks to how cheap it will be even after the added liquefaction and transport costs are factored in. Europe is anxious to wean itself off of Russian gas (which frequently comes with strings attached), Japan needs to plan a new energy regime in the post-Fukushima world, and the rest of Asia—China in particular—has a voracious appetite for energy to power its growth.

This isn’t the only piece of America’s LNG export puzzle falling into place. The widening of the Panama Canal, scheduled for completion in 2015, will give LNG tankers like the one pictured above a much shorter path to the Pacific. A large portion of America’s energy infrastructure lies along the Gulf coast, which makes shipping to Asia a roundabout endeavor. Since LNG tankers are too wide to fit through the canal as it currently exists, they have to travel a circuitous 16,000 mile route on their way to Asia. The canal will cut that route nearly in half, which will bring down the price of transporting the gas and make it more competitive in the Asian market.

As Reuters reports, that has investors in East African, Australian, Russian and Canadian LNG projects worried:

The Gulf of Mexico coast has tailor-made ports, storage and pipes it has used for LNG imports. It is part of the world’s biggest natural gas market and has specialist local labour available.

This gives LNG projects there a set of ‘brownfield’ advantages over ‘greenfield’ rivals off the undeveloped coasts of Mozambique and Tanzania, in the harsh Russian Arctic, and in remoter parts of Australia and Canada. […]

Adding to uncertainty for non-U.S. projects is the widening of the Panama Canal and the cost reduction that will bring for U.S. LNG exporters.

We’ve noted before the difficulties other countries have had in replicating America’s shale gas success, but with the widening of the Panama Canal and the construction of new US LNG export terminals, the rest of the world might soon be muttering this variation of an old adage: “If you can’t beat ’em, import from ’em.”

[LNG carrier image courtesy of Lightgraphs]

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  • cubanbob

    It’s not enough. Not only must we remove impediments in our own domestic energy production we must also demand that our allies who have unexploited reserves do the same. A large portion of our defense budget is tasked to make sure those countries have access to imports from volatile areas. This needs to stop now or advise our allies that on this they are on their own if they aren’t willing to do what is neccesary to lessen their dependence on unstable or adversarial suppliers.

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