The Wrongologist

What’s
Wrong Today:

A
few quick notes regarding yesterday’s column about exporting
natural gas. Blog reader and commenter extraordinaire, Terry McKenna said:

Bloomberg
echoed Terry’s worry when Russia invaded Crimea:

So here
comes the manufactured threat by speculators that attempts to boost prices. We’ve been
warned.

As Terry indicates, gas has been a cheap source of energy for us. But,
given the situation in Europe and the push by Republicans to export it, how
much longer will it be cheap?

According
to the CME
Group an energy consultancy, not for long: (emphasis, brackets and
parenthesis by the Wrongologist)

And
wouldn’t that be just grand for the energy industry?

As Terry commented, natural
gas is what is called a stranded asset.
That means it doesn’t travel well or cheaply. Until recently, pipelines were
the only transport method, so exporting was impossible. That changed about 30
years ago, as LNG became more available, and the energy industry began to build
infrastructure for it.

But
the cost of liquefying natural gas is very high. And the entire supply chain
for exporting LNG is expensive to build and maintain. You need to liquefy it,
pipe it into a special, pressurized tanker to transport it to Europe. You need a specialized
facility at the European port to take it off of the tanker and store it, and a
facility to de-liquefy (called re-gasification) the LNG, and distribute in
Europe’s existing pipeline infrastructure.

It
makes the “landed” cost of LNG in Europe very high. That will attract gas
supply to Europe, and thus cause gas prices domestically to increase, as demand
for our available supply will go to overseas buyers who will pay the most. Winter heating costs will go up for those Americans who heat with natural gas.

Now,
liquefying natural gas (LNG) for export sort of works, if there is a cheap
supply (as in Qatar) that doesn’t have to travel very far. But the farther
natural gas goes, the more of it burns off along the way, meaning a portion is
lost to evaporation, which adds to the cost (it also adds to the gasses that cause
climate change).

Even
without converting natural gas into LNG, a little over 8% of US natural gas is used up in processing and getting it to US customers.
Converting it into LNG, exporting it across the ocean (while some more burns
off), and re-gasifying uses up even more of the product.

Perhaps
the best outcome FOR AMERICA would be if virtually none of this natural gas
export capacity ever gets built. If it is really possible to get the natural
gas out of the ground, we need it here instead.

But
that would go against the basic energy policy of the Republicans and the business
media, which is “Drain America First”.

Otherwise,
prepare for higher natural gas prices.