Another sign of change in the North American natural gas industry, the Wall Street Journal reports Apache Corp. has agreed to supply gas to the Kitimat LNG terminal in British Columbia for export into the Asian market. The Kitimat facility was initially conceived of as an import terminal to tap Middle Eastern and Australian LNG supplies, but with the dramatic natural gas supply shift in North America the developers reversed plans.
It seems hard to believe that Russia would sell LNG into the United States if Canadian producers could profitably export LNG to Asia, so I’m discounting that suggestion. Could it possibly be cheaper to ship gas from British Columbia into California as LNG traveling through Mexico than via overland? Perhaps if the overland pipelines become capacity constrained due to increased gas production in Wyoming and other Rocky Mountain states.
Also, a hugely expensive and risky natural gas pipeline from Alaska into central Canada or the U.S. midwest seems much less likely in a world of LNG exports from the Canada. A few years ago the project appeared essential, but now I’d say the market won’t support it for at least another 10 years. So there is plenty of time for Alaskan state politics to work things out (and plenty of reason to think it won’t be enough time for Alaskan state politics to work things out). The question for pipeline supporters: how long before new gas supplies, from shale and other recently developed sources, become expensive enough to justify an Alaskan gas pipeline project?
(HT to a former student, thanks David.)
ADDED, from the Financial Times Energy Source blog, a story about the natural gas industry lobby in Washington, DC:
He says senators are listening, and he has hopes they will recognise the growing role natural gas could play in the US, given how new technology has opened unconventional shale gas projects across the country, making the potential role of natural gas far larger than anyone anticipated just three years ago.
The politically useful thing that shale gas technology has done, at least from the point of view of natural gas industry lobbyists, is move several states from the “net consuming” to the “net producing” column.