The People of America's Oil and Natural Gas Indusry

Natural Gas, LNG Exports and Benefits to the U.S.

Mark Green

Mark Green
Posted May 12, 2017

The export of U.S. liquefied natural gas (LNG) continues to yield economic and other benefits locally, regionally and to our country as a whole. Two recent news items illustrate – a report detailing the boost LNG exports is giving the Texas economy, and an agreement by Poland to buy American LNG, further expanding opportunities for a valuable U.S. commodity.

First, the growth in domestic natural gas output:

Chart: US LNG Production 1970-2015

And the recent rapid rise in U.S. LNG exports – with export facilities in Texas coming online:

Chart: EIA LNG exports through Feb 2017

A report by North Texans for Natural Gas quantifies the economic benefits of LNG export activity – in direct investment and jobs and generated tax revenue – for the state and the country as well. Expansion of the Freeport LNG export terminal is expected to employ more than 3,500 workers during the four- to five-year construction phase, the report says. It’s estimated the project will generate between $5.1 billion and $7.4 billion in economic benefits per year. That’s just one project. Texas has seven facilities under construction or proposed. At the same time these projects generate tax revenues that help build local infrastructure, support education and emergency services.

Nationally, the report points out, Texas LNG export facilities could create more than 136,000 jobs, with an economic impact of more than $145 billion. All attributable to domestic natural gas output, thanks largely to safe hydraulic fracturing and horizontal drilling. The report:

Just a little over a decade ago, many believed that the United States would need to import increasing amounts of liquefied natural gas (LNG) in order to make up for declining domestic production, from the areas available for exploration and production. Fracking turned this belief on its head, as U.S. production soared in places such as the Barnett Shale in North Texas and the Marcellus Shale in Pennsylvania.

Overseas markets continue to develop for U.S. natural gas. The United States is on track to send its first shale LNG to Poland next month, Bloomberg reports. It’s the first such contract for Central and Eastern Europe and reflects Poland’s effort to diversify its supply of natural gas. Bloomberg:

Poland may offer a new outlet for Cheniere, which said it’s targeting emerging markets as new production facilities from Australia to the U.S. lead to a glut of the fuel. Poland’s Law & Justice government has sought to cut the nation’s dependence on Russia’s Gazprom PJSC for more than two-thirds of gas supplies, stating it has no plan to extend a long-term supply contract beyond 2022 and plans new infrastructure including a pipeline to Norway.

Meanwhile, the U.S. and China have reached an agreement to promote U.S. LNG shipments. U.S. Commerce Secretary Wilbur Ross told reporters at a White House briefing: Bloomberg reports:

“This will let China diversify, somewhat, their sources of supply and will provide a huge export market for American LNG producers.”

Indeed it could. All of the above points to a cycle of benefits for the U.S. from its natural gas wealth. Domestic abundance helps consumers in terms of their heating and electricity costs. Abundance means opportunity to export – trade that brings oversea wealth into this country while stimulating more output here at home. Abundance and exports also provide safe, secure energy to America’s friends abroad.

Call it a win-win-win scenario for American energy.

ABOUT THE AUTHOR

Mark Green joined API after a career in newspaper journalism, including 16 years as national editorial writer for The Oklahoman in the paper’s Washington bureau. Mark also was a reporter, copy editor and sports editor. He earned his journalism degree from the University of Oklahoma and master’s in journalism and public affairs from American University. He and his wife Pamela live in Occoquan, Va., where they enjoy their four grandchildren.