When I started LNG Allies two and a half years ago, the energy world was quite different.
Crude oil prices were in the $110 per barrel range, natural gas at the Henry Hub was trading above $4.00 per million BTUs (mmbtu), and spot LNG deliveries to Asia were bringing nearly $18.00 as measured on the same basis.
Now, oil is trading at $40 to $45 per barrel, Henry Hub prices are averaging about $2.00 per mmbtu, and LNG spot market deliveries to Asia are in the $4.50 to $5.00 per mmbtu range.
But, that’s not all that has changed.
As this is written, five U.S. LNG export facilities are under construction—versus just one 30 months ago. Moreover, initial export cargoes have already shipped from the first production “train” of the most advanced project, the Sabine Pass terminal operated by Cheniere Energy in Southwestern Louisiana.
Besides those first five export terminals, two other projects have received construction permits from the Federal Energy Regulatory Commission (FERC) and at least three others should receive a similar “green light” before the end of the year.
In addition, the Department of Energy (DOE) has been steadily issuing licenses to export “the molecules” from those FERC-approved projects.
While these federal regulatory developments are notable, what has been really remarkable—in my opinion —is the evolution of the politics of the LNG issue.
In late 2013, there was organized opposition to LNG exports. An ad hoc lobbying coalition was arguing that the United States had to severely limit LNG exports to ensure that the domestic chemical industry would always have sufficient supplies of low-cost natural gas.
But the predicted gloom and doom never materialized even as domestic natural gas demand increased. In fact (as stated above), natural gas prices have actually declined by about 50 percent over the last two and a half years, while dozens of new chemical, fertilizer, and electric power plants have come on line.
As a result, the opponents of U.S. LNG exports have been largely silenced and even many of the most skeptical politicians won over.
How did this happen?
A lot of different organizations, including LNG Allies, had a hand in educating Congress and the public-at-large about the myriad benefits of U.S. LNG exports.
Our diverse coalition, which includes U.S. upstream producers, LNG exporters, and several foreign governments—most notably in Central and Eastern Europe—made the case that U.S. LNG exports could bring geostrategic (as well as economic and environmental) benefits to America’s allies.
Now, as the initial wave of U.S. LNG exports has started, LNG Allies is pleased to announce that we have begun a collaboration with Our Energy Moment (OEM), a diverse group of businesses, ports, and economic development organizations that is also dedicated to raising awareness and celebrating the many benefits of expanded LNG exports.
Our immediate task is to help push the pending LNG legislation over the congressional finish line so that a final bill is presented to President Obama as soon as possible.
This legislation has been steadily gaining bipartisan momentum as evidenced by the recent 85-12 Senate vote on final passage of S. 2012, a major energy bill which included the LNG provisions.
This legislation could speed up the final stage of the LNG permitting process by six to twelve months and we’re glad to see that it is steaming towards enactment.
However, our work will not end when the LNG bill is signed into law.
Dozens of other U.S. LNG export projects are under development, and our two organizations will continue to articulate the many domestic and foreign benefits that will accrue if/when these projects are built. The benefits here in the United States are especially clear: expanding LNG export markets will create thousands of jobs and grow our economy.
Given current LNG market conditions, it is often difficult “to see the ocean for the waves.” But, it is obvious to us that the United States and hundreds of other nations will need to dramatically increase the use of natural gas if climate, geostrategic, and economic development goals are to be met.
Together, LNG Allies and Our Energy Moment will continue to champion the U.S. LNG exports cause. While we’ve come far in a very short period of time, we’ve still a long ways to go. Fortunately, momentum is on our side and the future of U.S. LNG exports looks very bright indeed.
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Fred Hutchison is executive director of both LNG Allies and Our Energy Moment.