US Sees Gold with LNG. But do Manufacturers and Chemical Makers?

Who said the energy industry doesn’t turn on a dime: Witness how the United States has gone from being an energy-dependent natural gas importer to what is likely to become to a net exporter as early as this year. But how will this affect prices that US manufacturers are paying as well as the domestic economy?

Overall, the development of shale gas and the ability to super-cool it before shipping it out in the form of liquefied natural gas, or LNG, is positive. That’s because the US now pays considerably less for the commodity than does Asia or Europe, which means those potential sales would boost the bottom lines of American oil and gas developers that are in desperate need of some good news.

And while many on the green side would disagree, it may also benefit the global environment — if that natural gas would displace foreign coal use. For those reasons — economy and environment — the US Department of Energy has given approval for some companies to convert their LNG import facilities to those that can now export the fuel.

First up: Cheniere Energy, at its Sabine Pass project located on the border of Louisiana and Texas. While it has been delayed by a few months, it will start exporting LNG in phases beginning later this year. After that, Freeport McMoran Energy, which got approval nearly three years ago to export LNG.

To this end, Barclay’s Commodities Research says that six LNG export facilities should be operational by 2020, according to a research report in which the publisher Platts profiled. Beyond Cheniere and Freeport’s projects, the others include Lake Charles Exports, Cameron LNG, Dominion Cove Point and Southern Cos. Elba Island. When they are all up-and-running, the US will be the world’s second largest natural gas exporter behind Qatar.

“In a shift of tectonic magnitude, the US is firmly on track to become a net exporter of natural gas, with far-reaching implications for the US economy, geopolitics, natural gas markets and the global LNG space,” the report said, as noted by Platts.

“Ultimately, LNG exports will likely have the greatest effect on the natural gas markets, both in the US and globally,” it continues. “This would bring geopolitical and price diversification to the global LNG markets and re-draw regional LNG shipping trends, sending tankers sailing on longer trade routes.”