A missed opportunity for liquified natural gas (LNG) infrastructure synergy in an eastern Australian port represents something of a cautionary tale to other countries looking to build out their own LNG export terminals. Bloomberg reports:
On the leafy southern shore of Australia’s Curtis Island, a jetty shoots out over a stretch of water to fill tankers the length of city blocks with liquefied natural gas. Another jetty juts out about 2 kilometers south. A further 800 meters down the coast sits a third.
For one industry veteran, the crowded shoreline represents a $10-billion missed opportunity. It’s the amount that could have been saved had the energy rivals that built separate LNG plants on the island collaborated on a single facility, according to Martin Wilkes, a consultant with 20 years industry experience. They could have produced the same amount of fuel but eliminated extra jetties, storage tanks and other costly infrastructure, he estimates.
$10 billion is obviously an enormous chunk of change, even by energy major standards. It’s not surprising, though, given that the costs associated with constructing a single LNG export terminal run into the tens of billions of dollars.
A decade ago, the United States was looking to construct import terminals for LNG, a sign of our nation’s concern over our energy balance at that time. Since then, the shale boom has remade our entire energy outlook, changing the attitude from one characterized by scarcity to the steady confidence that comes with being a major energy producer. With all of the shale gas we’re now producing, LNG import terminals no longer make sense, and we’ve since broken ground on export facilities (and are, in fact, exporting cargoes of LNG from one such already).
There’s a big push to bring more LNG export terminals online quickly so that U.S. gas producers might find new buyers for their product abroad. In that rush, though, let’s not make the same mistake those three Australian LNG producers did. If there’s an opportunity to “share” a facility, we might not only save a chunk of change, we could also become a major global LNG player more quickly.