Liquefied Natural Gas Export in the U.S.

Biz Asia America

JST LNG

With production of natural gas on the upswing in the U.S., the government is looking to turn its import business into an export one. The second federal permit was just granted to Dominion Cove Point in the U.S. state of Maryland. CCTV’s Jessica Stone has this report from Cove Point.

On the shores of America’s largest estuary, among the birds and marsh grasses, the tall white tanks of Dominion Cove Point’s Liquefied Natural Gas Terminal. After a decade of importing liquefied natural gas, or LNG, the company is now poised to export it.

“The spike in American energy production has changed global market dynamics”, says Mike Frederick. He’s Dominion’s Vice President of LNG operations.

When CCTV’s Jessica Stone asks Mike Frederick if he had a sense of what LNG export was going to mean globally, Mike said: “It’s a tremendous benefit. By 2016, the ULiquefied Natural GasS is going to have a surplus of natural gas, so we’d export a small portion of that.”

In the past five years, global demand for liquefied natural gas, or LNG, has increased. After the disaster at Japan’s Fukushima Daiichi Nuclear Power Plant in 2011, the nation decided to shift to natural gas for electricity production.

And recent unrest in Ukraine has sparked a European search for new sources of the fuel –beyond Russia.

But the U.S. only has one operational LNG export terminal, and a pair of federal approvals has only been granted to one other LNG terminal – which is in Louisiana. The U.S. Department of Energy is expected to limit natural gas exports so as not to adversely affect domestic capacity. Import facilities like Cove Point in Maryland are likely to be approved to export first.

Cove Point applied for its first export permit in 2011. But before it can build anything in this field, it has to get a total of 50 permits in all, meaning it won’t be able to get online to export any of that Liquefied natural gas until sometime in 2017.

From Mike Frederick’s perspective on LNG process, the process that they look at is extensive and thorough. He says there are “12 thousand pages of application to FERC initially” and they’ve “augmented it with another 9 thousand pages”, which is a very extensive review.

Cove Point already has almost all the infrastructure in place.

Mike Frederick says: “Everything for the platform offshore is already here. All we really need to add is the liquefaction equipment.”

The platform is a sort of floating natural gas station — capable of accommodating two LNG tankers at a time. Dominion will have two customers for the next 20 years: Gail of India and Sumitomo of Japan.

Mike Frederick also says: “We know that Japan has had Fukushima so they’re looking for additional supply from a gas perspective. India is growing rapidly. They’re looking to replace coal fire generation with natural gas. China’s the same thing — rapidly growing country that’s looking for additional power generation sources.”

It may be a long road to export LNG, but energy companies say once the U.S. has the capability, they will have the flexibility to meet global energy needs, with a product that generates lower greenhouse gas emissions.

Bill Cooper is the President of the Center for Liquefied Natural Gas. It’s a trade group in Washington D.C. that made up of producers, shippers, and energy trade groups. He says the U-S has the supplies but entering the global marketplace will be tough. CCTV’s Phillip Yin has the report.