The shale gas revolution: We have not yet begun to boom
posted at 8:01 pm on July 10, 2013 by Erika Johnsen
As I’ve now argued many times over, the Obama administration is extravagantly fond of citing statistics about how our oil imports are way down while our domestic oil production is way up, with the implicit suggestion being that their policies somehow deserve the credit for these phenomena. See, they really are about an “all of the above” energy strategy and you can’t say that they’re anti-oil or anti-fossil fuel, because America is currently experiencing an economic and employment boom via domestic oil and gas production!
In fact, however, much of the credit for the current oil-and-gas boom and our decreased reliance on foreign sources belongs to production on state and private lands, and the Obama administration still has plenty of policies in place actively restricting permitting to the federal lands and waters to which plenty of companies would really like more access. Yes, we’re experiencing an oil-and-gas economic boom, but many of the Obama administration’s policies are coming at the direct opportunity cost of an even bigger boom.
It’s a similar story with natural gas and the many companies who are awaiting on pending applications to export the stuff in its liquified version. Companies are only freely allowed to sell and ship liquified natural gas to countries with whom the United States already has special, specific free trade agreements; but obviously, and as with any industry or economic sector, natural-gas companies would very much like to be allowed expand the market and reap the subsequent economic benefits.
Certain Democrats in Congress — who happen to have various manufacturing and environmental interests, with their own very definite stake in the domestic price of natural gas, vociferously egging them on — have been holding up the show with the patently ridiculous and wildly inconsistent claim that free trade somehow might not be in the “national interest.” Dumb.
The Obama administration, however, has at last been showing some small signs that they might finally be ready to start letting up on the LNG-export front. I missed it last week, but Energy Secretary Moniz again attested that the administration is going to get moving soon:
U.S. Energy Secretary Ernest Moniz said his department will conduct a “fair amount of action” in evaluating applications for natural gas exports amid concerns within the industry over delays.
“I’m planning to go through them as rapidly as I can,” Moniz said, according to Reuters.
Companies looking to ship liquefied natural gas abroad must first apply to the Department of Energy for a permit. These U.S. firms have voiced frustration over lengthy delays and changes to the department’s rules.
About two weeks ago, ExxonMobil (XOM) Chief Executive Rex Tillerson criticized delays in approving more natural gas export projects, saying U.S. companies are losing millions of dollars a day and the nation is losing ground to other countries.
“It’s a very competitive marketplace. It’s not like people are just going to stand at our door like panting dogs just waiting for us to give this (LNG) to them,” Tillerson said.
Unfortunately, however, it sounds like they’ll be doing so at a pretty pathetic pace. DOE officials are saying that they can only approve permits at a pace of one permit every couple of months, which means that companies at the back of this queue (via Real Clear Energy) will be waiting until 2015 at least.
The queue at the Department of Energy for permits to export natural gas to the energy-starved manufacturing nations of Asia is long and not showing any signs of moving. Listed here are the 26 applications that have been put before the Department of Energy. Of them only two permits – Chenier’s Sabine Pass facility in Louisiana and Freeport’s facility in Texas – have been permitted. Meanwhile rival producers such as Qatar, Australia and Indonesia are rapidly signing long-term contracts with Japan, Korea and China. By the time the Department of Energy gets around to acting, there may not be much of a market left.