|5/22/2013 4:31:00 PM|
Liquefied Natural Gas and South Texas
Last week, the Obama Administration conditionally approved a $10 billion facility in Freeport, Texas, which will allow for the expansion of liquefied natural gas (LNG) exports. LNG is the byproduct of the process of cooling natural gas to negative 260 degree Fahrenheit. The practice of producing LNG is particularly useful in the transportation of natural gas; the volume of LNG is one six hundredth of gaseous natural gas.
According to a recent Wall Street Journal article, the decision to expand LNG exports is an about-face from the United States' previous outlook as a natural gas importer. The anticipation of greater U.S. demand for imported gas compelled companies to construct natural gas terminals to be used for the importation of natural gas.
Shale gas, natural gas that is found within shale formations, has increased the amount of available natural gas resource base. The Eagle Ford Shale formation, which spans across the State of Texas, has been a primary contributor to this explosion in available gas and gas reserves. The increased supply and production teamed with the decline in gas prices has made the export of natural gas attractive to domestic firms.
The Department of Energy approval of LNG exports from Freeport LNG terminal could permit the facility to export nearly 1.4 billion cubic feet of LNG per day. Yet, the facility will maintain import capability in the event the domestic market establishes a need. According to Freeport LNG, the increase in natural gas production will result in an estimated annual economic benefit to the U.S. of between $4.3 and $6.2 billion.
In an editorial in the Brownsville Herald, U.S. Congressmen Filemon Vela and Gene Green highlight the economic impact of LNG exports on Texas; the construction of one LNG plant would provide up to 3,000 construction jobs, would employ roughly 300 highly paid workers, and deliver new tax revenue. Although Freemont LNG is the second project to garner conditional export approval, at least five additional LNG export projects, including one in San Patricio County, are in development. Approving these projects future projects will allow for greater economic development as well as provide jobs and resources for the continued improvement of our State.
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