JACKSON HOLE, WY -- U.S. energy producers could begin exporting liquefied natural gas within the next five years as they seek ways to combat falling natural gas prices, said energy specialist Loren Scott, president of Loren C. Scott & Associates, at an economic summit Friday in Jackson Hole, Wyo.
Several companies are already investing billions of dollars to convert import terminals along the Gulf Coast into LNG export facilities, said Scott during his speech at the Rocky Mountain Economic Summit hosted by the Global Interdependence Center and the Bronze Buffalo Club.
The conference, which took place at the Jackson Hole Center for the Arts, included entrepreneurs and top U.S. economists who discussed issues and opportunities relating to the global economy. The event was the fourth-annual gathering founded four years ago by strategic planning and risk-management firm Hyde-Norton Group.
Scott said he does not believe LNG exports will result in significant price increases.
"There is going to be some impact on pricing, but I think there is so much supply that we're talking about maybe a ceiling of about $4 per million BTU," Scott told IndustryWeek. "We're not talking about going back up to $10 or $15, which was a real problem for us in the early 2000s."
The increased demand from exports could benefit manufacturing as energy and chemical producers invest in new production plants. He cited a proposed $10 billion facility by South African energy giant Sasol Ltd. as an example.
In April U.S. regulators approved an LNG export facility for Cheniere Energy Partners L.P. The company is investing approximately $4 billion to $5 billion to retrofit facilities in Louisiana for LNG exports, Scott said. The company expects to begin production in 2016, said Scott, whose firm is based in Baton Rouge, La.
LNG exports could increase even further as technology advances, Scott said. Future plants could be located offshore on a ship that would free LNG exporters from permitting requirements, Scott said.
Global Challenges
U.S. chemical producers have benefited more than any other manufacturing industry from the shale gas boom. The industry has gained ground on European competitors because the primary feedstock in U.S. chemical production is natural gas-derived ethylene. In Europe, the primary chemical feedstock is oil-based naphtha.
That could change as policymakers in European countries realize their vast shale-gas resources could make them more competitive, Scott said. Some countries, including France, have outlawed fracking.
China could be another major player in developing shale gas resources in the coming years, said David Lincoln, managing partner of Element Partners, a private equity investor in energy.
"China may have the most shale reserves," Lincoln said.
But so far, there has not been any significant production in China, Lincoln said.
Competition from overseas natural gas supplies will eventually impact U.S. manufacturers that have benefited from the shale boom, Scott said. But it's unlikely to happen in the near future, as evidenced by the major plant expansions announced in recent years by chemical companies.
Policy Issues and Transparency
Public acceptance of gas expansion in the United States could hinge on public policy and industry transparency, Lincoln said.
He suggested that states adopt severance or production taxes that could be used to rebuild areas impacted by shale gas development. This includes investments in roadways damaged by trucks and land reclamation.
Fracking itself does not pose a contamination danger, but surface contamination does need to be addressed through policy and regulation, Lincoln said. He recommended closed-loop systems that prevent fracking waste from touching the ground.
The oil and gas industry has taken steps to make itself more transparent to the public but could do a better job of educating people through more aggressive public relations campaigns, Lincoln told IW.
