Cheniere Energy Inc. has received federal approval to build the largest U.S. natural-gas export terminal so that producers can sell natural gas discovered in the U.S. to buyers in Asia and Europe, according to a report by Bloomberg Businessweek.
This is good news for the Oilheat Industry as it is the first step in bringing natural gas prices here in North America onto the World Market and eventually elevate natural gas pricing here to World Market Prices.
The Federal Energy Regulatory Commission (FERC) approved an order this week that will let Cheniere build a $10 billion plant adjacent to its Sabine Pass gas-import terminal in Cameron Parish, La., about 170 miles west of Baton Rouge, according to the report. The Houston-based company will borrow $4 billion to help fund the construction.
Exporting natural gas is potentially very lucrative for producers, but there is concern that U.S. customers will pay higher prices. Natural gas prices in Asia are 10 times higher than U.S. prices, and U.S. Rep. Edward Markey (D-MA) has filed legislation to protect American consumers by delaying the permitting of natural gas export terminals.
Bloomberg Businessweek reports that Cheniere will compete with LNG producers in Indonesia, Yemen, Qatar and Australia that charge customers in Japan and South Korea as much as 10 times the price of U.S. supplies.
Environmental groups including the San Francisco-based Sierra Club have opposed the Cheniere project, saying converting natural gas to liquid form emits carbon dioxide, which is linked to climate change. Some critics of the plan had also said exporting the gas would drive up costs for domestic users, according to the article.
Cheniere Chairman and Chief Executive Officer Charif Souki has lined up customers for much of the terminal's planned export capacity, according to Bloomberg Businessweek. The clients are London-based BG Group Plc, Barcelona- based Gas Natural Fenosa, GAIL India Ltd. and Korea Gas Corp.
South Korea, Japan and Spain are the world's largest gas buyers, according to the U.S. Energy Department. Japanese utilities were paying $20.87 per million Btus for Yemeni gas in January, more than 10 times current U.S. prices, the article states.
International gas prices have soared because of rising consumption by power generators and chemical plants, and to plug the energy gap stemming from the Fukushima nuclear meltdown in Japan last year.
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