Over the past few years, the U.S. energy landscape has been transformed.
New drilling techniques have unlocked vast reserves of natural gas within shale rock formations and as the supply of natural gas soared, prices dropped. The U.S. is now producing more oil and gas than it imports. Experts are even raising the possibility that the country may one day be energy independent.
All of this serves as background to discuss an interesting development in the natural gas industry: The federal government recently granted permission for a terminal on the Gulf Coast of Texas to ship liquefied natural gas to Japan.
Now, this may not sound like a big deal. But gas producers have been lobbying to increase the amount of natural gas they can send overseas. Gas prices are much higher on the global market than they are here at home.
The decision is seen by many industry observers as an indication of the government’s willingness to approve even more gas exporting agreements. (Terminals are allowed to export natural gas to countries with whom the U.S. has a free trade agreement, but they must seek government approval to send gas elsewhere.)
So, what does this trend mean for the natural gas industry?
One concern is that exporting more natural gas will reduce domestic supply, raising prices for consumers. However, some say an increase in prices will provide an incentive for companies to produce more natural gas, keeping prices in check.
It’s important to remember that the volume of natural gas deposits accessible via new drilling techniques is vast. The contemplated increase in gas exports is comparatively much smaller and some expect a limited impact on domestic prices.
At Gas South, our natural gas experts study the industry closely with one goal in mind: to offer our customers great prices and the most reliable service.
So, what do you think about exporting natural gas?