NEW YORK (AP) — Federal regulators have approved the first large-scale natural gas export facility in the U.S., signifying the rapid shift under way for a country suddenly rich in the natural resource.
It is also represents a banner year and turnaround for the company building the facility, Houston's Cheniere Energy Inc., which in December was placed on Standard & Poor's Creditwatch due to the risk of default.
The Federal Energy Regulatory Commission cleared the construction of the Sabine Pass LNG terminal in Cameron Parish, La. The facility, which will chill natural gas into a liquid that can be shipped on tankers, will allow U.S. producers to export natural gas overseas for potentially huge profits. An existing LNG import facility at the site will be converted also to handle imports.
U.S. energy companies will compete with major LNG exporters like Qatar, which can charge customers in Asia much higher prices compared with prices in the U.S. That is largely because of the massive glut of supply in the United States, where drillers have freed enormous amounts of natural gas using new technology.
So much natural gas has been captured that there are concerns the country is reaching capacity storage and prices have been driven to 10-year lows. Prices fell below $2 per 1,000 cubic feet Tuesday.
The shift to exporting natural gas has divided the country on numerous levels, from Washington to chemical manufacturers, many who fear that prices will rise when the U.S. begins exporting to Asia and other developing regions.
Sierra Club executive director Michael Brune criticized the decision, saying that exporting natural gas would encourage more use of hydraulic fracturing, the technology that has freed copious amounts of natural gas from shale deposits, but a technique that environmentalists say may be polluting groundwater, among other things. He said FERC was “willfully ignoring the health of millions of Americans who will be affected by wreckless fracking.”
Brune said the company's exporting license cannot be finalized until the Energy Department reviews the potential dangers of the relatively new drilling technique.
Congressional reaction was mixed. Rep. Ed Markey, D-Mass., called Cheniere's plans an “export tax” that will increase electricity and heating prices for consumers and increase gas costs for such industries as steel, plastics and fertilizer.
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