Following a recently released Dept. of Energy macroeconomic study that concluded exporting natural gas would have an overall positive economic benefit, U.S. contractors are supporting a rush of feasibility and engineering work for potential liquefied-natural-gas, or LNG, export terminals.
DOE could begin deciding within a month whether to let developers export LNG to countries without free-trade agreements (FTA) with the U.S. A favorable ruling would send exporters scurrying down the long road to approval from the Federal Energy Regulatory Commission (FERC), then securing multibillion-dollar contracts and financing to build the behemoth terminals.
"It's a very large and growing part of the project-execution business," says Gary Donovan, vice president of sales for North American energy and chemicals for Fluor Corp., which is developing LNG terminals in other countries. "It's a big opportunity in North America. It seems to be developing quite rapidly."
At the beginning of January, 23 developers had applied to export a total of 31.41 billion cu ft (bcf) per day of natural gas—almost half the total of U.S. natural-gas production—to non-FTA countries. While it is assumed that exporting LNG to FTA countries would be in the national interest, DOE must evaluate deals with non-FTA countries on a case-by-case basis.
Just a few years ago, no one would have expected the U.S. to have a surplus of natural gas: Developers were planning and building LNG import terminals. However, shale-gas development has provided a glut. Producers are pushing to export the cheap LNG to developing countries and places such as Japan, which is paying six to eight times the price of U.S. natural gas for its LNG. Japan, though, is a non-FTA country.
An $11-Billion Trickle
In 2010, DOE approved one non-FTA agreement for Cheniere Energy to export 2.2 bcf a day out of Sabine Pass on the Louisiana-Texas border. FERC permitted the facility, and Cheniere awarded Bechtel engineering, procurement and construction projects to build two phases of the $11-billion facility.
But after that first approval, DOE held off approving more terminals until it could further study the export of LNG. One study by the Energy Information Administration led to a second study by NERA Economic Consulting; that study was released on Dec. 5 by DOE.
The NERA study found the export of natural gas would have an overall economic benefit to the U.S. but at a cost to those not involved in the natural-gas industry, including consumers who would pay more for natural gas.
Exporting LNG has its fans, from the oil-and-gas industry to more than 100 members of the House of Representatives who are urging quick approval of the terminals to boost the economy.