The United States is the world's largest energy importer, a statistic that
has impacted its economy and foreign policy for decades. But is it about
to become a major exporter of one type of domestic fuel?
A Houston-based company took a small, tentative step in that direction on Thursday, by saying it was working on a deal to supply
liquefied natural gas from Louisiana to one of China's largest
independently owned natural gas companies.
There are still hurdles. The exporter, a subsidiary of Cheniere Energy Inc. still needs a government permit to send gas to China. The Energy
Department issued it an export permit in September, but it needs to be
expanded to include China. And the signed memorandum of understanding
with the Chinese company disclosed Thursday is far from a done deal.
However, Cheniere already has a site in Sabine Pass, La., and support of local officials, though an expensive liquefaction facility still
needs to be built. It is also working on a deal with investment banker Morgan Stanley to trade the gas, similar to its deal with a subsidiary of China-based ENN Energy Trading Co. Also on Thursday, Chesapeake Energy
Corp. Chief Executive Aubrey McClendon told investors at a conference
he has been in talks with Cheniere to supply gas to the proposed
Charif Souki, chairman and chief executive of Cheniere, said the
interest from these two companies confirms the global appetite for U.S.
natural gas. He said when he announced his intention to create an export
facility this summer "all the pundits said you won't do it because you
won't get the permits, it is too expensive and there is no market." The
deal with the Chinese company, formerly known as XinAo Gas, is proof, he
says, there's a ready market.
In recent years, the U.S. has gone from a natural gas shortage to a gas glut. New exploration and drilling technologies have unlocked
enormous amounts of gas in Texas, Louisiana, Arkansas, Pennsylvania and
elsewhere. The abundance of gas has driven prices down, even as demand
for the fuel is predicted to remain flat in the U.S., according to the
International Energy Agency.
Meanwhile, demand for gas is surging in Asia as economies there expand. And gas is still bought in most Asian contracts at a price
pegged to crude oil. This means that gas bought in Louisiana for $4 per
million British thermal units can be resold for three times as much in
China. That difference potentially makes it worthwhile to pay for
shipping and for the cost of paying Cheniere to liquefy gas, a process
of lowering the temperature to 260 degrees below zero Fahrenheit for
transport. Once there, the gas would be reheated for use.
The U.S. has exported gas to Japan from Alaska for years. The Cheniere facility would be much larger, capable of exporting up to two
billion cubic feet of gas daily—about ten times as much as the Alaska