As the rush to export liquefied natural gas (LNG) gathers steam, the Energy Advantage portfoliois primed for even bigger gains.
Make no mistake, LNG exports are now set to hand us one of the best investment opportunities of the decade.
That's a stunning reversal from just seven years ago, when everyone agreed the United States would be using LNG imports to meet 15% of its gas needs by 2020.
However, the unconventional shale boom (shale, tight, and coal bed methane) has changed everything we used to think about natural gas.
Now, even the most conservative Russian estimates acknowledge that the U.S. could be providing between 6% and 8% of all LNG exports worldwide by 2020.
In fact, Cheniere Energy Inc. (NYSE: LNG) has already garnered no fewer than five huge, multi-billion dollar, 20-year contracts with some of the largest European and Asian importers.
But new developments have suddenly thrown up another hurdle that threatens to delay all of this economic promise.
Here's the countermove that's brewing in Washington, D.C...
A New Wrinkle in the LNG Export Debate
At the eleventh hour, the Environmental Protection Agency (EPA) has now stepped in.
At issue is the application by Sempra Energy (NYSE: SRE) for permission to export LNG from a terminal at Cameron, La.
You see, despite the fact that the Department of Energy (DOE) authorized exports in this case over a month ago, the Federal Energy Regulatory Commission (FERC) must still approve all export permits.
That's where the EPA has figured in.
The U.S. environmental regulator has again raised concerns about what the export of LNG may mean to the aggregate production of natural gas.
Specifically, the EPA has recommended that FERC review the proposed Sempra Energy export project to determine the potential environmental effects of more natural gas drilling. The EPA released its findings on March 3, but FERC only published its findings on March 28.
In its findings, the EPA urged FERC to weigh the indirect greenhouse gas emissions and other environmental effects that would result from the increase in gas drilling required to supply exports from the Cameron plant.
Now both sides on the issue of drilling regard the EPA assessment as a new wrinkle in the debate over how much LNG should be exported from the United States.
FERC should "consider the extent to which implementation of the proposed project could increase the demand for domestic natural gas extraction, as well as potential environmental impacts associated with the potential increased production of natural gas," the EPA said in response to the commission's draft review of the project.
An Exercise in "Keystone XL Logic"
Of course, we've already seen an application of this type of reasoning in another recent policy decision.
In providing what amounted to support for the construction of the Keystone XL pipeline, the environmental impact assessment (EIA) released by the U.S. Department of State concluded that the pipeline project would not directly lead to increased heavy oil and oil sands production in Canada.
In other words, the "indirect" impact on production argument has already been employed.
About the Author
Dr. Kent Moors is an internationally recognized expert in oil and natural gas policy, risk assessment, and emerging market economic development. He serves as an advisor to many U.S. governors and foreign governments. Kent details his latest global travels in his free Oil & Energy Investor e-letter. He makes specific investment recommendations in his newsletter, the Energy Advantage. For more active investors, he issues shorter-term trades in his Energy Inner Circle.