US to launch blitz of gas exports, eyes global energy dominance

The US Energy Department prepares a wave of LNG gas permits in the latest move to redraw the world's oil and gas landscape

The United States is poised to flood world markets with once-unthinkable quantities of liquefied natural gas as soon as this year, profoundly changing the geo-politics of global energy and posing a major threat to Russian gas dominance in Europe.

DYI Comments:  No doubt about it; the U.S. State Department desires to significantly reduce Central Europe's dependence on natural gas from Russia.  Russia would experience a revenue short fall from reduced sales and price.  A one two punch slowing down and possibly shutting down any military plans that Russia (Putin) may have in mind.  If this is pushed aggressively there is a very real possibility that Russia would lose control of the Caucasus and historical Lapland's without the money to fund their military to adequate size.

Below the historical Lapland's.

"We anticipate becoming big players, and I think we'll have a big impact," said the Ernest Moniz, the US Energy Secretary. "We're going to influence the whole global LNG market." 

Mr Moniz said four LNG export terminals are under construction and the first wave of shipments may begin before the end of this year or in early 2016 at the latest. 

The mile-deep Marcellus basin stretching from West Virginia through Pennsylvania to New York state is driving the explosive growth. Interlocking fractures in the rock make it possible for a single well with advanced technology to extract much more gas than thought possible just five years ago.

Once thought to be in decline, the Marcellus alone produces 113 BCM a year. This is roughly equivalent to Russia's exports to Europe through the Nord Stream, Yamal, and Brotherhood pipelines. 

Mr Mueller defiantly sweeps aside those who claim that the US fracking industry is in serious trouble, insisting that drilling costs are coming down so fast that his company - and others - are staying a step ahead of falling prices.

He is continuing to invest heavily and hopes to boost output by up to 10pc annually for the next three years, despite a drop in gas prices to around $2.60 per million British thermal units (BTU). "If it stays around $3, we'll be fine," he said. 

The US Energy Information Administration (EIA) expects gas prices to rise to $4.88 in real terms by 2020, and $7.85 by 2040. 

What is remarkable is that US drillers can produce a third more natural gas today with 280 rigs than they did in 2009 with 1,200 rigs. Total shale output has soared to over 350 BCM from almost nothing a decade ago. It now makes up half of US gas production.

The Obama administration has so far been slow to approve new export terminals for LNG, partly because of concerns that the US would lose its massive advantage in energy and feedstock costs for industry. 

Gas sells at for $7 in Europe, and over $10 in North-East Asia, four times more expensive. This cost-gap has been a key driver behind America's so-called "manufacturing renaissance", stoking an investment boom in chemicals, plastics, and glass, and saving the country's steel mills from slow death.

 

Any future American cargoes would further erode Gazprom's pricing power in Europe, and erode the Kremlin's political leverage. The EU already has a large network of import terminals for LNG. 

Lithuania has just finished its "Independence" terminal, opening up the Baltic states to LNG. Poland's new terminal should be ready this year.

 A vault forward on this scale would establish the US as the leading energy superpower in both oil and gas, a revival that almost nobody could have imagined seven years ago when the United States was in near panic over its exorbitant dependency of imported fuel. It would restore the US to its mid-20th Century position as a surplus trading nation, and perhaps ultimately as world's biggest external creditor once again.

DYI