America’s got enough natural gas that it’s time to start looking at exports. Alaskan state legislators have just over a month to keep the ball rolling on a massive liquified natural gas (LNG) project that would help bring America’s glut of natural gas to Asian markets. The FT reports:
The Alaska LNG project, which has an estimated cost of $45bn-$65bn, would mean a bonanza for the state’s economy and offer a fresh source of supply for Asian gas buyers. […]To keep the plan on track as planned for a final go-ahead in 2018, it needs approval from the state legislature in its present session, which ends on April 20.
The LNG plant would liquify natural gas for shipment across the Pacific, where it would fetch a much higher price than in North America. To justify the cost of liquefaction, shipping, and regasification, the gas would need to fetch a price in the low teens per million Btu. Asia’s gas-hungry economies are already shelling out nearly $20/mBtu, so there’s a price incentive for gas producers and, as the FT reports, for Alaskans as well:
Angela Rodell, the commissioner in Alaska’s department of revenue, told the Financial Times that Alaska LNG could make “a huge difference” to the state’s economy, generating about $4bn a year or about $5,500 for every one of the state’s 730,000 inhabitants, and raising its unrestricted tax receipts – which the state government is free to spend as it chooses – by about 80 per cent from their 2014 levels.
Perhaps the biggest beneficiaries here are America’s allies in Asia. Japan is especially dependent on foreign sources of energy. In the wake of the Fukushima disaster it shut down its nuclear reactors, which supplied nearly a third of Japan’s energy needs. LNG has replaced roughly 44 percent of that lost nuclear power, at a tremendous cost to the Japanese economy.Japan currently gets just three-tenths of a percent of its LNG from the United States. This new project could dramatically increase that number and nudge down prices while simultaneously boosting East Asian energy security with a relatively steady and stable new supply.Fracking has given America a bounty of shale gas, and that oversupply has depressed prices far below what the rest of the world pays. Opening up the spigot a bit to export gas to Asia would strengthen our relationships with key partners on that side of the world and reward America handsomely.