Liquid Natural Gas Could be Slated as America’s Energy Surprise Weapon

In view of President Obama’s resounding election victory, the previously hoped-for outburst of fossil fuels (oil, natural gas, coal) would seem to be headed at best for a current level holding pattern. While Republican presidential nominee Mitt Romney had put fossil fuels and fracturing technology at the head of the drive toward energy independence, the chance for closing the eight to ten million barrels a day import gap is now relegated to the limbo of forlorn hopes.

Likely gone is the possibility of the XL Trans-Canada oil pipeline, the expansion of “fracking” into multi-million acre potential of federal lands, and the very existence of coal as a major stimulus for power generation, steel conversion, and even its sustenance for exports due to ever more stringent mining standards.

Despite already proven to be ineffective, the Administration is now even more strongly committed to such renewables as solar power, wind, geo-thermal, electric cars and bio fuels, no matter how high the subsidies have to rise to make these marginal supplements cost-effective. With Chinese solar panels already putting government-supported U.S. solar manufacturers out of business, it will take a near-doubling of today’s gasoline prices and a substantial rise in electric utility costs to make the bulk of renewables commercially viable.

With over 100 new EPA regulations to be imposed by the first-term EPA holdover, Commissioner Lisa Jackson, the fossil fuel outlook appears especially grim, with its regulations holding on to previous gains, at best. However, one bright, shining star, liquid natural gas, may prove to be a major offset to the inability of the 87% solution (oil, coal, natural gas) to deliver additional revenues, employment and productivity growth.

Although not widely publicized, two major liquid natural gas dock utilizations are already in the early building stages. Located on the Texas shore of the Gulf of Mexico, these were originally planned as receivers for overseas LNG imports, before fracking turned a growing natural gas deficit into a surplus.

While fracking in North Dakota’s Bakken Belt was originally a sidebar to the extraction of oil from shale, it has now turned into a huge glut within the past three years, since it flared out with every shale oil extraction. This brought the price per a million BTU’s (the universal price measurement) down to $1.90. Although having crept back up to as high as $3.50 during the past summer’s hot spell, it’s still well below U.S. prices that had soared to as high as $15 per million BTU’s five years ago, and retracted to the $5 to $6 range before fracking hits its stride less than three years ago.

With the glut getting so high as to force a cutback in drilling rigs, and flaring off natural gas that accompanied oil shale extraction, the U.S. reserves that could be made available far exceed present potential.

With reserves practically limitless, exceeding those of world leader Russia, Qatar and Algeria, the only missing link is the ability of shipping docks and tankers to transport U.S. LNG supplies to natural gas-starved Central Europe, the United Kingdom and Japan. All of these pay prices for these growth resources far above the U.S. level.

Despite the further regulation crackdown by EPA, the growing U.S. natural gas boom conversion to LNG may see the U.S. advantaged by prices as much as $15 per British thermal unit in Germany. In the current sea of energy pessimism, LNG may become the shining light that makes a difference in the coming years.

The Desert Sun