By Rep. Charles Boustany
This week, the 2013 Pacific Energy Summit will be held in Vancouver, British Columbia, from April 2-4. The Summit provides a forum for leaders across the world to discuss and collaborate on topics revolving around energy security and climate change. This year's theme, "Forging Trans-Pacific Cooperation for a New Energy Era," focuses on realizing the potential for energy trade and investment between Asia and North America. As an attendee of this year's discussion, I seek to highlight and promote the exportation of liquefied natural gas (LNG) and the subsequent transformation of the United States into a global energy hub.
In 2009, the United States surpassed Russia in becoming the world's largest producer of natural gas. Due to recent technological advancements, large deposits of natural gas resources, mainly shale gas, are now being harvested. Through the use of hydraulic fracturing or "fracking" and horizontal drilling, previously inaccessible hydrocarbons are now seeing the light of day. Combined with the nation's abundant supply and consequential low domestic price for natural gas, the United States now has a surplus of this vital resource.
In its annual energy report for 2012, the U.S. Energy Information Administration projected overall natural gas production to grow by 28 percent between 2010 and 2035. With such projections, natural gas producers across the country are seeking new markets in which to sell their product. The congressional district I represent is the location of a key natural gas pricing center, Henry Hub, and the first LNG export facility in the continental United States. Low prices during the last two years have delayed full scale development, but positive signs indicate the economic opportunities for our nation by exporting LNG.
The United States is no stranger to LNG exportation. Due to the glut of natural gas, our nation finds itself in a unique position to grow its exports of LNG. In liquid form, LNG is safe, non-corrosive, non-toxic, and non-flammable. Risks are minimal in transportation of LNG. The Kanai LNG export terminal in Alaska has been doing it since 1969. By permitting LNG export facilities in Louisiana, already-existing infrastructure, such as major natural gas pipelines serving 2/3 of the nation's natural gas markets, can be fully utilized.
LNG continues to serve as an attractive energy source to companies and governments in Europe and Asia. For instance, in Japan, natural gas can cost in upwards of $20 per MMBtu. Compare that to $3-$4 per MMBtu here in the United States. Unlike other commodities like oil or gold, there is no central pricing system with natural gas. Therefore, the international price of the commodity continues to fluctuate depending on the market one shops. However, LNG continues to be used for the same purposes across the world: home heating, cooking, and commercial and industrial use. LNG can become a valuable trade export providing reliable energy sources to markets otherwise unreachable.
Many of the current or proposed export terminals in the United States are located on the East and Gulf Coasts. This may be attributed to the fact Europe continues to experience an increase in demand with a high capacity for importing LNG. However, with the widening of the Panama Canal, growing Asian demand will provide for additional natural gas markets to open up. Exporting LNG to these areas of the world is a win-win for all parties involved. It brings an additional source with ample supply to the marketplace. With domestic demand being met, shipping excess LNG leads to job creation at home, a reduction in the national trade deficit, and in increase in revenues for the federal government. As a Member of the House Ways and Means Subcommittee on Trade, I believe these are all value-added benefits for our nation. By bringing larger volumes of natural gas to market, the role this commodity plays in international development could also be enhanced. The primary beneficiary of such actions would be countries with surplus supplies of the product, specifically the United States.
Opponents of LNG exportation argue shipping this commodity outside our borders will only increase the price of manufacturing feedstock fuel. These detractors cite how an increased international demand will only force global prices to turn volatile leading to demand shocks. This could not be further from the truth. According to the American Petroleum Institute, the barriers of entry for LNG facilities remain high as a single project can require anywhere from $5-45 billion of capital investments in addition to years to build and properly permit the site.
The domestic natural gas boom presents the United States with an opportunity to become a global energy player. Our nation should seize this opportunity and not let it pass by. It's in the public's interest. However, the rest of the world is not far behind, nor will it wait. Australia has eight LNG facilities currently under construction; the United States only has one. Because of LNG, the United States now finds itself standing on the edge of an unprecedented domestic energy renaissance with South Louisiana serving as the hub of operation. I'm proud to see South Louisiana doing its part to lead the way in harnessing this energy source and turning into a global game changer. The rest of our country should do the same.