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Analog Devices, Inc. Message Board

  • duydinh_t duydinh_t Jan 11, 2013 7:13 PM Flag

    Current NG price meant, the price oil around $18/br. It is considered nnfair to NG producers. Debate is on.

    Natural gas exports are turning into Washington’s hottest energy question.

    Five big corporations that rely on low gas prices announced a new trade association to try to block “unfettered exports,” and Ron Wyden, the new chairman of the Senate Energy Committee, sent a letter to the Energy Department asserting that the analysis the department was relying on to justify the exports was outdated and inaccurate.

    The gas drillers, meanwhile, have established a new group to push for export approvals and lined up two former energy secretaries — Bill Richardson, a Democrat, and Spencer Abraham, a Republican — to press their cause.

    The issue is driven by fracking, which has lowered the price of a million B.T.U. of gas to the range of $3.25, down 75 percent from its recent peak. Gas with the same energy content as a barrel of oil now sells for about $18, one-quarter of oil’s price. And industry experts say they can convert the gas to a liquid, load it on a tanker and deliver it to distant markets for a price that remains far less than the world price of oil. Fracking, which involves injecting vast quantities of water and chemicals into underground shale formations to extract natural gas, has vastly increased gas supplies.

    This has set off a rush to export. By Senator Wyden’s count, companies have applied to build plants that would liquefy and export 48 billion cubic feet a day, a huge amount; in comparison, the Energy Information Administration predicts that daily consumption this year will be nearly 70 billion cubic feet.

    It is unlikely, of course, that all or even most of those projects will reach fruition. If they did, they would flood the world market. But exports would probably drive up prices. How much is not clear; companies that produce gas say they have vast additional capacity that they have shut down because of low prices, and that if prices rose to $4 or $4.50, production would soar.

    But the companies benefiting from cheap natural gas are sounding nervous. For shale gas, produced by fracking, Peter A. Molinaro, the vice president for government affairs at Dow Chemical, “the words ‘game changer’ now seem insufficient.” His company has reopened chemical plants that it closed when prices here were high, and big industrial users have collectively planned $90 billion in new investments because of cheap gas, he said.

    Dow joined Alcoa, Eastman Chemical, Nucor steel, Celanese and the American Public Gas Association to form a new group, America’s Energy Advantage to seek to limit exports.

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