A recently struck natural gas export deal means United Kingdom residents will soon have their homes heated by U.S. natural gas — a welcome development in a country that has seen its gas reserves nearly depleted due to unusually cold weather.
The Guardian reports that nearly 2 million UK homes will get U.S. shale gas thanks to a deal struck by the energy companies Centrica and Cheniere Energy Partners, L.P. to export liquefied natural gas from a plant in Louisiana.
Cheniere is one of the first U.S. firms to get permission to export liquefied natural gas and the first deliveries are expected in 2018. The deal represents a huge shift in UK energy use as gas fields in the North Sea run out and pipelines to mainland Europe remain costly.
“I warmly welcome this commercial agreement between Centrica and Cheniere,” said UK Prime Minister David Cameron. “Future gas supplies from the U.S. will help diversify our energy mix and provide British consumers with a new long-term, secure and affordable source of fuel.”
In the short run, the deal won’t help with Great Britain’s current gas crunch as exports probably won’t enter the country until September 2018. However, the export deal will help ease future gas supply crunches.
Natural gas exports have been a contentious issue in the U.S. as the oil and gas industry look to export gas abroad while environmentalists, manufacturers and the chemical industry want to restrict exports.
“The shale gas boom in this country has really brought a competitive advantage to the United States,” said George Biltz, vice president of energy and climate change at Dow Chemical, who added that unrestricted exports “would raise prices dramatically, would have a very negative effect on this industry and a massive ripple effect economically.”
The shale boom has caused natural gas prices to plummet to about $2 a unit in the U.S., reports the Guardian, while prices in Europe and Japan remain relatively high at $10 to $12 a unit.
However, the Energy Department released a study that showed the U.S. economy would benefit from natural gas exports under every cost scenario analyzed.
“In all of these cases, benefits that come from export expansion more than outweigh the losses from reduced capital and wage income to U.S. consumers, and hence LNG exports have net economic benefits in spite of higher domestic natural gas prices,” reads the study. “This is exactly the outcome that economic theory describes when barriers to trade are removed.”
Environmental groups deplore the deal. “Emergency gas shipments to maintain Britain’s energy security are yet further evidence of our shambolic energy strategy,” said Andrew Pendleton, head of campaigns at Friends of the Earth. It’s time to pull the plug on our fossil fuel dependency and switch to a 21st century energy policy based on clean power and slashing waste.”
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