American Oil and Gas Reporter - March 2016 - 44

SpecialReport: Gas Industry Strategies
High-Growth Markets

Exports: American Freedom

Three critical growth sectors-petrochemicals, electric generation, and liquefied natural gas exports-will play major roles in
realigning supply and demand. By some estimates, demand is expected to increase by double digits over the next five years as new
facilities in these sectors enter service.
Converting natural gas molecules into petrochemical products,
electricity and a liquid that can be transported around the world
will help usher in a new era for the domestic market-one that is
defined by a stronger and more stable business environment and
supply/demand equilibrium. With the additional demand from
these high-base-load applications, I believe natural gas is positioned to pull the domestic industry out of this downcycle, sparking economic renewal both inside and outside the industry.
It is becoming increasingly apparent that oil and gas are among
a select few segments of the U.S. economy that have grown in
recent years. High levels of oil and gas activity benefitted many
other segments because the manufacturing and industrial sectors
sit right on top of energy, the base of America's economy. Contrary to the notion that cheap energy always stimulates the economy, the oil and gas downturn is impacting the broader U.S. economy negatively.
If the rest of the economy was robust, and not essentially stagnant since 2008, then cheap oil and gas probably would drive additional growth. However, given the oversized impact of the shale
revolution in the context of the overall economy, current prices,
and subsequently a precipitous shutdown throughout the industry, everything else is following suit. The lesson to be learned is
that developing domestic oil and natural gas supplies drives many
other economic sectors and is good for the nation, not only the
energy industry.

On the last day of 2015-only days after legislation was enacted to end the ban on exporting U.S. crude oil-a tanker set
sail from Corpus Christi, Tx., to deliver the first shipment in 40
years of "liquid American freedom" to a port in Europe. And
now comes LNG exports, another form of liquid freedom. The
first LNG cargo to leave U.S. shores for overseas markets departed Cheniere Energy's Sabine Pass terminal in Louisiana in
late February, signaling an historic opportunity both for the North
American natural gas industry and potential consumers around
the world.
The geopolitics are complex, but U.S. oil and gas exports provide a powerful strategic advantage for America's allies around
the world. They now have alternatives to OPEC and Russian monopolies, affording them supply stability and sourcing options they
would not have otherwise.
LNG also opens the global market to domestic gas. The first
four U.S. export terminals are scheduled to commence operations
over the next four years: Cheniere's Sabine Pass plant, Cameron's
plant in Louisiana, Freeport LNG's facility in Texas, and Dominion's Cove Point plant in Maryland.
Together, these four terminals have the capacity to liquefy 7
Bcf/d of gas for export around the world! Obviously, 7 Bcf/d is
a lot of gas, representing nearly 10 percent of total U.S. demand
in 2014. And, even more LNG terminals are in various stages of
permitting and construction in the lower-48. In the bigger picture, LNG exports have the potential to stimulate the U.S. economy and support a large number of permanent, high-paying jobs.
What about demand for natural gas as feedstock? According
to the American Chemistry Council, 226 petrochemical construc-

Hundreds of gas-fired electric
generating and petrochemical
facilities being built all across
the country, along with the first
wave of LNG export terminals,
are ushering in a new era for the
domestic natural gas market.
Shown here is a row of largehorsepower reciprocating compressors in a Southern Pine
Electric Power Association gas
storage and transmission plant
in Mississippi.

44 THE AMERICAN OIL & GAS REPORTER

American Oil and Gas Reporter - March 2016

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