Natural Gas Stocks 2014: A Bullish Sign from This LNG Export News

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Natural Gas Stocks 2014: As Russia's clash with Ukraine and the West boils on, pressure is mounting for the federal government to loosen export regulations on U.S. liquefied natural gas.

Currently, the U.S. exports natural gas to only a handful of countries, such as Canada. No U.S. LNG is exported to Europe.

That's mainly because the key factor in gaining the U.S. Department of Energy's blessing to export is whether or not the importing country has a free-trade agreement (FTA) with the United States.

Before this week, a total of six permits for sales to non-FTA nations, like India and Japan, had been issued – five of those permits had been granted in the last 10 months.

But on Monday, the Department of Energy conditionally approved the $7.5 billion Jordan Cove LNG project in Coos Bay, Ore., making it the seventh export terminal to receive a federal permit to export to a non-FTA nation. Final approval for the project is still subject to environmental and regulatory review, the Department of Energy said.

The Jordan Cove terminal will export to Asia, and not to Europe, where lawmaker proponents of LNG exports hope that U.S. LNG would undermine Russia's grip on Europe's natural gas markets.

Russian President Vladimir Putin has threatened multiple times to restrict gas supplies as a weapon in this conflict with Ukraine and the West. This places heightened urgency and importance on the exportation of U.S. LNG as a means to meet increasing world energy demands.

And that's a major bullish sign for natural gas stocks in 2014…

Geopolitical Pressures Boost Need for U.S. LNG

U.S. exports of LNG could mitigate any shortages in Europe caused by the Ukraine-Russia conflict.

natural gas stocks 2014

Prior to Monday's conditional approval, the Department of Energy's six approved projects to export LNG to countries without FTAs amounted to a flow-rate volume of 8.5 billion cubic feet per day (ft3/d) of LNG. Compare that to the 6 billion ft3/d that Russia exports to Europe via Ukrainian gas pipelines; Russia provides 30% of Europe's gas using pipelines that cross Ukraine.

"Expanding U.S. LNG exports is an opportunity to combat Russian influence and power, and we have an energy diplomacy responsibility to act quickly," U.S. Rep. Fred Upton, R-MI, chairman of the Natural Resources Committee, said earlier this month. "We will continue to advance legislation and develop new proposals that allow market forces and technology to help expand Eastern Europe's access to affordable energy beyond Russia."

Even though the United States is the world's largest natural gas producer, efforts to export LNG have been drowning in federal rules, financing issues, and construction demands – winning federal approval can take three years or more.

Only one of the six approved projects has final approval from the federal government, and it will not start exporting natural gas until 2019.

That's why the Obama administration's decision on Monday to conditionally approve the Jordan Cove export terminal was met with praise from lawmakers.

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  1. Jeff P. in Canada | March 27, 2014

    You say that USA is exporting gas to Canada????? I would love to have more details about that because Canada has some of the largest natural gas reserves on the planet, and much of that is just sitting with well-head taps closed, ready to be used whenever it is needed, or whenever pipelines are available to transport it to needy markets.

    • Tom | March 28, 2014

      Sounded weird to me too. Maybe the author meant that US has a permit to export, since US has a free-trade agreement with Canada, but actual exports are not really happening.

      • Tara Clarke | March 28, 2014

        Jeff P. and Tom,

        Thank you for your remarks! Jeff P., you are indeed correct that Canada has plenty of natural gas reserves of its own. It ranked 20th in the world for natural gas proven reserves as of 2010 data. And Tom, you are also correct – the U.S. Dept. of Energy requires licenses to export natural gas to all countries except those which have FTAs with the U.S., and Canada is one such FTA country.

        You'll both be interested to know that the U.S. does in fact export natural gas to Canada. Take a look at this list of U.S. natural gas exports by country: http://www.eia.gov/dnav/ng/ng_move_expc_s1_m.htm

        Thanks again for the comments, and for taking the time to read my article.

        -Tara Clarke

  2. 000057794747 | March 28, 2014

    I believe the purpose of Russian grandstanding is to make sure that its natgas keeps flowing to Europe, which will need it for a long time still. The US will never be able to supply that much at a reasonable price.
    Also I believe that, with the huge undeveloped natgas resources around the world, US natgas will be most useful in domestic electricity, petrochemical production etc. The whole world will benefit from reasonably priced natgas eventually, boosting industrial production and general prosperity.

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