Tuesday, August 21, 2012

Passing Gas

ExxonMobil recently completed an LNG import facility in west Louisiana. The project name was Golden Pass and cost about $1 billion and took three years to construct. The plan was take LNG, warm it up to gasify it and put it into the nation's pipeline network.

But now Golden Pass has applied to become a export facility and build a $10 billion LNG facility on the same site. The plant will liquify and export some 15.6 million tons of LNG per year. That's about 2 billion cubic feet per day. Why would they do this before they have even reached the break even point from their first project, you ask?

The answer is that the US now has an abundance of natural and the oil companies see us becoming an exporter instead of an importer. But, but, but, I though we had an energy crisis? Where did this natural gas come from you may wonder?

In a word - hydraulic fracturing. This technology has unlocked vast reserves of natural gas and has caused the long term planners to re-think their markets. Plus, they can get more dollars for their gas in the overseas market. Here's the story.

Now, ask Obama why he'd rather shut down coal plants instead of using this natural gas to generate electric power.


Old NFO said...

Um... Because he can???

mostly cajun said...

Welcome to my world. My back is against one o fhte oldest LNG import sites in the country. Four years ago we completed an expansion. We did our commissioning run. We have received exactly ONE ship since then. The storage tanks are empty and the cryo system is warmed up and we never expect to RECEIVE another ship.

We are, however, in the 'pre-feed' stages of building a liquifaction facility for export of LNG.

If the Luddites don't shut down fracking.


Clay said...

First off, deepwater gas holds probably more reserves than shale gas (there's a question on which is more economic to produce). Don't forget that when Independence Hub came on line, that increased domestic gas production by >10% with the turn of a single export valve.

I also tend to be skeptical of the economics of shale gas, like Loren Steffy (Houston Chronicle writer):

There's tons of gas out there at $9-10 per MMSCFD, but how much at $2-3? Are their other factors (like Chesapeake's need for cash flow) that are hiding the true cost of the gas that's currently being produced?