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Opinion, California, Santa Monica, Columnist

Natural Gas Exports Will Raise Prices, And Soon

Thomas B. Elias, Columnist
Santa Monica Mirror Archives
Thomas B. Elias, Columnist

Posted Apr. 19, 2014, 8:48 am

Tom Elias / Mirror Columnist

Because of hydraulic fracturing in states like North Dakota and Wyoming, Californians and other Americans have enjoyed lower natural gas prices over the last two winters than any time in the last 15 years. That continues right up to this moment.

But if the natural gas industry and the Obama Administration have anything to say about it, today’s relatively low-cost heating and cooking may soon be matters of nostalgia.

That’s the meaning of the three approvals already issued by the Obama-appointed Federal Energy Regulatory Commission (FERC) for either building new terminals to export liquefied natural gas (LNG) or to convert existing import plants to export facilities. More are likely to be approved soon.

Californians should well remember LNG, natural gas frozen into a fluid state near its source and then shipped around the world for use in places that don’t produce their own. The new American export plants, carrying benign-sounding names like Cove Point and Sabine Pass and Jordan Cove, aim to send LNG to places like Europe, Japan, Korea, China and India. They’ve gotten new impetus from ongoing disputes between Ukraine and Russia, source of most of Europe’s natural gas.

Less than 10 years ago, Californians were battling over whether and where to put plants for importing LNG, the result of a decision by the state Public Utilities Commission to give up some of the state’s reserved space on pipelines bringing gas here from Texas, Oklahoma and Colorado.

The answers were no and nowhere. Proposals for plants near Eureka, Oxnard, Long Beach and Santa Monica all died because companies promoting LNG imports never proved the state would ever need gas imported by sea. The later discovery of vast quantities of gas right in California, available if the massive deposits in the Monterey Shale geologic formation are ever fractured, or fracked, means California may soon need no imported gas at all.

So this state dodged a financial bullet, not getting stuck with hyper-expensive LNG.

But prices here will nevertheless rise because of the export licenses now being handed out for gas the industry has defined as “surplus.”

This likely fact of life emerges in a remarkable letter sent to Alaska’s Republican U.S. Sen. Lisa Murkowski last fall by a top federal Energy Department official.

Murkowski has pressed for quick approval of an LNG export facility in her state, warning that “The United States has a narrowing window of opportunity to join the global gas trade.” Seeking oil and gas-related profits and jobs for Alaska, Murkowski never acknowledges the certain effect exports will have on domestic gas prices, sure to rise if the current surplus goes overseas.

In California, price effects will probably be immediate with the opening of planned LNG export plants near Coos Bay, Ore., and near Prince Rupert on the coast of British Columbia. Both would take allegedly surplus gas from western Canada fields that now supply California and the Pacific Northwest.

But FERC doesn’t care, according to its letter to Murkowski. “We take very seriously the investment-backed expectations of private parties,” wrote Deputy Assistant Energy Secretary Paula Grant. Would FERC rescind an export license if domestic gas prices rise precipitously because of that permit? No, said Grant. “DOE has no record of having vacated or rescinded an authorization to import or export natural gas over the objections of the authorization holder.”

The Energy Department is also ignoring protests by other U.S. industries whose recession recoveries have partly been fueled by low gas prices.

A group of firms led by Dow Chemical has demanded that FERC – which works hand-in-glove with the Energy Department – slow the rush to sell off America’s energy bonanza.

FERC, the companies say, should “clearly articulate in advance its criteria” for deciding what is in the public interest.

So far, no response. Which indicates that even with a majority of commissioners appointed by an allegedly consumer-oriented Democratic President, FERC is no more responsive to the interests of utility customers than it was during the energy crunch of 2000-2001, when Republican George W. Bush was president and the commission refused to stop predator companies that cheated Californians out of more than $10 billion.

It all assures gas prices here will rise sharply in the next year or two unless California’s congressional delegation unites to put the brakes on LNG exports, and soon.

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Comments

Apr. 19, 2014, 10:47:17 am

Marty Teen said...

You and the Koch brothers can drink poison fracking water until your death for all I care but once we start fracking the hell of of CA we will soon see all of our fresh water disappear. Like we have it to spare. If they don't drain all of the aquifers they'll like get tainted with tens of thousands of gallons of waste water that's so deadly the industry won't even tell the EPA what's in it. Then get ready for the earthquakes. Big ones. Oklahoma has had unprecedented (hundreds in 2014 alone one at 4.0) being directly related to oil and gas. What will that be like for CA? Get ready. It's going to happen. There is just too much money to be made. I can only hope that some of the resulting deaths will be oil executives. Cleanse the earth of parasites.

Apr. 19, 2014, 7:36:34 pm

Robert L said...

I have two oil wells on our family wheat farm in North Dakota, so I speak from experience, both operated by a Texas oil company under contract. Up until now, the natural gas produced as a byproduct of the so-called fracking is sold off for a fraction of its worth, and a lot is just burned off. If it can be liquefied and transported, the gas has far more value, and the oil companies and property owners (like me) will earn more and pay far more tax. Fracking has consistently and always been proven to have zero affect on anything, and extracts far more oil from the ground. The Lefties would prefer no American jobs (better for the Government to borrow more money to pay welfare), and buy oil from the Middle East, which sponsors the terrorists who want to kill all of us. All in the name of global warming and the polar vortex. Stupid is as stupid does.

Apr. 20, 2014, 10:34:01 am

Oil Baron said...

Hey Robert L - of course you're FOR it because you're the one profiting. I encourage you to go drink lots of your well water, preferably the closet to the well.

Apr. 20, 2014, 10:42:27 am

Right wing hate mongers said...

There go the right wingers again - notice that it's always about "me, me , me" with them. My wells, my guns, my profits, who cares about anyone else. The "lefties" are always looking to help one another and the planet. They right likes to call us "takers" all the time but it's obvious they are the one's always taking. Taking lives, money, resources. The right wing are responsible for nearly every atrocity that has occurred in the US for decades. If you had a disease this big you would fight to eradicate it.

Apr. 21, 2014, 1:18:00 pm

Jerry said...

Gas will go from a by product of oil production to a sought after product and expect the price to double. If the US exports gas as LNG the US is exporting jobs and the US's competitive advantage. Damn dumb Idea!

Apr. 21, 2014, 8:52:59 pm

Frack attack said...

Jerry, they don't care about jobs only profits. They'd build a pipeline through their own mother's @sshole if they thought it would make an oil billionaire another 50 cents.

Apr. 22, 2014, 11:46:01 pm

Gary Miller said...

I don't know who is more ignorant here, the author or the numerous commenters who do not want to be confused by the facts about hydraulic fracturing. If you are willing to consider studies by groundwater protection agencies of the states, please check out my summary of the study and if you wish read the full document yourself. http://trustedfinancial.com/helpful-financial-resources/112-energy-industry-focus.html Yours for honest and civil discourse, Gary Miller

Apr. 23, 2014, 5:56:46 am

Maya van Rossum, the Delaware Riverkeeper said...

If the Trans Pacific Partnership Trade Agreement (TPP) is passed it will grease the wheels for LNG export facilities by granting participating countries free trade agreement status that allows them to bypass normal review and approvals that the law would otherwise require.

Apr. 24, 2014, 3:48:32 pm

Gary Miller Lies said...

Gary Miller is EXACTLY the kind of crook to beware of! First he's a rich investor who has greedy interests tied to oil and gas production. He's also a liar. His supposed report was written BY oil and gas lobbyists and nothing but bullsh*t. It only proves how far these terrorist profiteers will go to make a buck jeopardizing lives. Shame on Gary E Miller. http://www.un-naturalgas.org/GroundWaterProtectionCouncil.pdf Does this fool really think we don't have Google to find out the TRUTH!?

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