Reputation of natural gas now a boon for Louisiana
LAFAYETTE — U.S. drillers have pushed natural gas production to levels that are changing America in fundamental ways.
The changes include falling pollution levels because of the clean-burning fuel, low costs giving manufacturers fat profit margins and exportation of an abundant commodity whose supply 5 years ago was supposed to be dwindling.
“We are in the middle of a once-in-a-lifetime opportunity to change our status in energy,” said Jason French, director of government and public affairs for Cheniere Energy Inc., which is building a natural gas export facility at Sabine Pass in Cameron Parish.
French touted Cheniere’s success Wednesday in front of 200 oil and gas personnel, who were among thousands of attendees at LAGCOE 2013, the biennial Louisiana Gulf Coast Oil Exposition at the Cajundome and Convention Center.
French and Louisiana Public Service Commissioner Scott Angelle said the ramp-up in natural gas production is nothing short of a revolution, bringing benefits along the economic line, from improved bottom lines for businesses to windfall savings for American families.
Angelle,the former head of the state Department of Natural Resources, said the average family in the United States now has an additional $1,200 a year to spend because the low natural gas prices forced down the price of utilities, products and groceries.
“It’s like an economic stimulus without any cost to the taxpayer,” he said.
Cheniere Energy is set to start exporting gas by 2015 or 2016, upon completion of two of the company’s six planned “trains.”
Trains are huge blocks of engines and processes that liquefy the gas at 260 degrees below zero, a process that reduces volume.
Once it’s liquefied, gas is loaded onto a ship for overseas transport, French said.
Trains 3 and 4 are scheduled for completion by 2017, and the company has completed its initial government filings for trains 5 and 6, which were added when Cheniere gauged overseas demand.
The final two are scheduled for completion in 2019, French said.
Despite having never exported a drop of gas, French said, Cheniere now has contracts for the next 20 years.
French and Angelle said America’s energy future is much brighter than just five years ago, when lauded economists such as former Federal Reserve Chairman Alan Greenspan predicted that natural gas production was waning.
Prices in 2008 reflected that fear. According to the Energy Information Agency, in June 2008 gas fetched more than $12 per thousand cubic feet at the Henry Hub in Louisiana.
The spot price for natural gas this week was $3.77 per million Btu, which is roughly equal to a thousand cubic feet.
French said Cheniere, believing gas was dwindling, built the initial Sabine Pass plant to off-load liquefied gas for an energy-hungry U.S.
Then the market did an about-face with the realization that gas could be extracted from shale formations where geologist had long known gas was locked up but were at a loss on how to extract it.
Since 2008 there has been an exponential increase in horizontal drilling and hydraulic fracturing, and a corresponding increase in production.
Cheniere Energy’s vice president of government and regulatory affairs, Patricia Outtrim, said the company examined U.S. natural gas reserves before deciding to invest $18 billion in an export facility.
Outtrim also said Cheniere is mulling the purchase of gas-carrying ships for export to Asia, Europe and other continents. She said the number of vessels owned by international shipping companies will not be adequate.
Cheniere also is planning to build an export facility in Corpus Christi, Texas.