Opinion

The Story Is Not Leaving the Paris Accord — It’s LNG Exports

The shale revolution has changed the economic landscape in the United States and has the potential to influence global economies and have a positive impact on global greenhouse gas emissions. This is possible because of technological improvements in an old technology, liquefied natural gas. The United States has an advantage because our natural gas prices are among the lowest in the world. But some seek to destroy our competitive advantage by trying to impose unnecessary cost issues and bottlenecks in LNG pipeline construction.

LNG exports have the potential to be extremely profitable, a big source of tax revenue, and provide thousands of well-paid construction jobs. Currently, the only LNG export terminal operating in the United States is Cheniere’s Sabine Pass facility in Louisiana. Although it opened only 18 months ago, Sabine Pass has already sent tankers delivering more than 100 cargoes of LNG to countries around the world. However, LNG projects face bureaucratic challenges. The review of the applications to build export terminals by the Department of Energy is extremely slow. The delays cost the applicants millions of dollars.

Perhaps more important is the ability to site and construct pipelines to carry the natural gas from the wellheads to the LNG terminals. Several pipeline projects have been slowed because of construction delays, amid protests by pipeline opponents, some of whom are using the pipeline projects in a grander ploy to block fracking shale gas.  While activists have the right to express their views, be they misguided, the character of the current opposition to the production and use of natural gas is contrary to the public interest and wrongheaded narrow prejudice against LNG. Many seem to forget that delays today will have grave repercussions for our competition in the global market for LNG.

Dominion Resources’ Cove Point is a LNG terminal in southern Maryland and can provide the Mid-Atlantic region with a great opportunity to participate in the global energy economy. Currently, it is the only LNG terminal on the East Coast with easy access to the European markets. Cove Point is a study of the national LNG issues. It is unclear where the gas will come from. For it to reach its potential, additional pipelines must be completed. The terminal was originally slated to be supplied by Transco’s planned Atlantic Seaboard pipeline; with gas transported from the Marcellus shale in Pennsylvania. Various groups in the Mid-Atlantic are attempting to delay the pipeline with the goal of disrupting the fracking in Pennsylvania.

The Cove Point terminal is about 90 percent complete and was on track to start up by the end of the year.  Dominion recently received approval from the Federal Energy Regulatory Commission to begin accepting gas at the terminal. However, the gas supply issue must be resolved. Regardless of the delays, Cove Point will open.

LNG’s value, commercially, environmentally, and geopolitically, is driving its success. U.S. LNG exports are expected to rise significantly in the years ahead with six LNG facilities under construction and another two-dozen applications to build additional terminals under review. The Department of Energy reports that soon 60 percent of the world’s LNG capacity will come from the U.S. Two of the largest markets will be Europe, which needs an alternative to Russia’s natural gas. The other is China, a country with severe air pollution that causes citizens to wear masks while outside and which hides the sun on an otherwise sunny day. This is due to burning coal; China needs clean-burning gas to replace coal in electricity generation. Chinese citizens are losing their patience with this polluted air. This represents a great opportunity for our LNG industry.

LNG is a powerful means to the right end, and it’s the end that counts. Every LNG cargo helps countries meet CO2-abatement goals by switching from coal to gas in electricity production. LNG has the potential to impact GHG emissions more than any promises made in the Paris Climate Accord. LNG is a strategic tool in countering Russia’s economic power by ensuring that Russia cannot use energy blackmail to impose its will on European energy trading partners. We need only look at the number of new jobs that LNG is providing. Exxon Mobil and Qatar Petroleum recently announced plans to build a LNG terminal in Texas that will create 45,000 jobs during construction.

 

Dan Ervin is a finance professor at Salisbury University with 25 years of energy experience.

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