After months of debate, the US Department of Energy has approved projects that will see increasing amounts of Liquefied Natural Gas (LNG) exported to Asia. Finding that the potential benefits of exporting energy outweighed possible concerns, the US Federal Energy Regulatory Commission has given the go-ahead to numerous domestic LNG projects, with two Louisiana companies leading the charge.
Thanks to advances in drilling techniques, including hydraulic fracturing, American natural gas output has climbed steadily since 2011, turning the US into one of the world’s largest producers. Asian nations, including India and South Korea, are eager to import American gas, especially Japan, which had to drastically rethink its energy mix in light of the Fukushima Daiichi nuclear accident. In September, Alaska's Department of Natural Resources and Japan’s Agency for Natural Resources and Energy signed a memorandum of understanding (MOU) securing low-cost and stable exports of liquefied natural gas (LNG) from the North Slope region.
The Department of Energy has said that it will weigh applications on a case-by-case basis, while many projects have already been accepted. Louisiana’s Cheniere Energy Inc. is likely to be the first among them to export LNG to Asia, with shipments expected as early as next year from the company’s terminal in Cameron Parish. Cheniere has agreed to provide gas to Korea Gas Corporation and Gail India Ltd. Another Louisiana company, Sempra Energy, has signed a 20-year joint venture agreement with Japan’s Mitsubishi Corporation and Mitsui & Co., Ltd for the development of an export facility at Hackberry, Louisiana, with an export capacity of 1.7 billion cubic meters a day.
Before the US shale gas boom, many companies built LNG import facilities, anticipating greater demand in the US for imported fuel. These facilities, such as the Freeport Project on Quintana Island, Texas, have been redeveloped into export terminals with the help of eager Asian investors. The relatively lower price of American LNG makes it a particularly appealing option for Asian nations, who are faced with prices from exporters such as Australia and Qatar, which are up to 40% more expensive than those offered by the US.
Jonathan Gordon is a graduate from the University of Sydney, and is a Research Intern at the East-West Center in Washington, D.C.