Guest Commentary: Louisiana and the Golden Age for Natural Gas
To tighten budgets and find relief from rising gasoline prices, it’s time to shift toward natural gas
Louisiana ranks fourth among the states in crude oil and natural gas production, behind Texas, Alaska, and California. However, if we include production from the Outer Continental Shelf (OCS), our state produces more oil and natural gas than any single state in the U.S.
Louisiana ranks first in natural gas processing capacity and second in petroleum refining capacity. Two of the U.S. Strategic Petroleum Reserve’s four storage facilities are located in our state. We also house the Louisiana Offshore Oil Port (LOOP), which is the only port in the U.S. capable of accommodating deepdraft tankers. Louisiana’s Henry Hub is the largest centralized point for natural gas trading in the country and provides vital access to major U.S. markets.
Another facet of our state’s diverse energy portfolio is the liquefied natural gas (LNG) import terminal at Sabine Pass. This terminal is the largest of nine existing import facilities in the U.S. Future plans for the Sabine LNG terminal could result in a new and lucrative addition to Louisiana’s energy infrastructure and could mean great news for our state and nation.
In late 2010, the Department of Energy approved the exportation of LNG from Sabine Pass to 15 countries with which the United States has a free trade agreement on natural gas. Recently this month, the Department of Energy issued conditional authorization to Cheniere Energy’s application to export LNG from its Sabine Pass terminal in Louisiana. Cheniere Energy plans to retrofit its existing import terminal and allow for liquefaction capabilities. The authorization allows Cheniere to export up to 2.2 Bcf/d of natural gas from the facility for a period of 20 years. Construction of the project is set to begin in 2012, and will come online in 2015.
The shale gas revolution sweeping across the nation has led to the creation of thousands of jobs and generated significant tax revenues for local and state governments. In northwest Louisiana, the Haynesville Shale has become the largest producing resource of natural gas in the U.S. and has had an economic impact of $17 billion in 2010 alone.
One thing that the Haynesville and other bustling shale plays have created is a significant supply glut of natural gas. The end result of this prolific natural gas production has been slumping and stagnant natural gas prices.
The authorization of the Sabine LNG export project could mean long-term relief from these low natural gas prices by opening up access to new markets, but more importantly, this project could have a positive impact on our nation’s ballooning foreign trade deficit.
The continual development of the OCS, the Haynesville Shale and the prospective future of the Tuscaloosa Marine Shale mean that Louisiana will play a vital role in determining our nation’s natural gas future. For decades we have tossed around the prospective idea of utilizing clean burning natural gas to fuel our economies into the distant future. At times the discussion has been lofty and hopeful at best. However, unlike decades past, the natural gas industry no longer faces volatile price fluctuations and questionable supply.
Today, all Louisianans are looking for ways to tighten their budgets and find relief from rising gasoline prices. With the hurdles of limited supply, adequate infrastructure, and an unstable price environment no longer issues, it’s time that we all look toward making a shift to natural gas.
Don Briggs is president of the Louisiana Oil and Gas Association.