Driven by falling domestic prices, a push to export LNG could bolster U.S. gas development. At the same time, new LNG exports could also open new fronts in the already polarized political debate on shale gas. Opposition is growing from some environmentalists and large domestic consumers, fueling a pitched political battle over whether LNG exports will increase gas price volatility or stabilize prices. Today’s GR Energy and Climate Brief assesses the move of the United States from LNG importer to potential exporter.

With today’s US Henry Hub natural gas prices at $2.40, representing a ten-year low, proposals are on the table to turn the US into a significant LNG exporter in the next three years. Three proposed LNG export terminals in the final stages of approval have become the focus of renewed attention on Capitol Hill since the Sabine Pass plant in Louisiana, the first LNG export project in the US, won approval from the Department of Energy last year. Today’s GR Energy and Climate Brief assesses the move of the United States from LNG importer to potential exporter.

Shale Gas Producers Looking to Export: That the US should be considering gas liquefaction for export is a direct outgrowth of the dramatic turnaround in US natural gas fortunes during the past five years. Natural gas from shale formations accounts for almost all of the increase in US gas production since its low point in 2003, and comprises more than 20% of total US marketed gas. However, excess capacity has dramatically lowered natural gas prices in the US, which at $2.40 are well below the industry average break even of $3.50, and not sufficient to induce the amount of investment needed for the US to take full advantage of its shale gas resources. A consortia made up of Southern Company, BG Group, Dominion Power, Blackstone, and Sempra Energy has proposed gas liquefaction projects on the US Gulf Coast and at Cove Point, MD to export LNG to international markets, as a pressure release valve to minimize the impact of overabundant natural gas supplies and low prices.

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