|Your Energy Manager|
Topic: Natural Gas Exports - Not So Fast
Independent Energy Consultants, Inc. is committed to helping its clients make well-informed and cost-effective decisions regarding their energy supply and consumption. We are sending you this newsletter to help you understand how decisions made, or not made, affect your company's bottom line.
A Rush to Export
With the recent boom of shale gas supplies in the U.S., many industry participants are pushing to export liquefied natural gas (LNG) to other coun
tries where the prices are much higher. This effort has found new support from U.S. legislators as a result of Russia's annexation of Crimea and apparent efforts to regain control of all Ukraine. While the desire to send natural gas to European allies may be noble, it's certainly not a decision we should rush into.
The U.S. has gone more than 30 years without a cohesive energy strategy and we face many domestic challenges in the near future. It is myopic to be calling for the U.S. to export its recent bounty overseas before serious planning and debate.
U.S. Storage Inventories at Record Lows
The increased supply from shale gas in the U.S. is a new luxury. Let's not forget that the facility owners now pushing to export natural gas originally built those sites for imports only. That's because just five years ago our nation feared that we couldn't produce enough natural gas to meet our own needs, let alone those of other countries.
This past winter saw enormous demand for natural gas as a result of 30-year low temperatures and a longer than normal heating season. Many suppliers were caught off guard having not secured enough gas to meet contractual needs and consumers witnessed gas prices soar. At the start of the winter the nation's storage reserves were expected to be between 1.6 and 2.4 trillion cubic feet (Tcf) by winter's end. They ended up at 0.8 Tcf, the lowest levels in over 10 years. We saw natural gas prices double over the winter even with our new supplies from shale gas; without it, prices could have increased 5-10 fold. Energy prices remain volatile and as a nation we need to remain vigilant with our policies.