The Department of Energy gave a Texas-based energy company permission Tuesday to export liquefied natural gas (LNG) to countries with which the U.S. does not have free trade agreements.
Golden Pass Products will build an LNG export terminal capable of shipping 2.21 billion cubic feet per day (Bcf/d) of natural gas around the world. It’s the first LNG export terminal approved by the Trump administration, adding to the already 19.2 Bcf/d of exports approved by the Obama administration.
The export facility will create an estimated 45,000 direct and indirect jobs over the next five years, according to Golden Pass. The company estimates the construction operation of the facility will generate up to $3.6 billion in federal and state tax revenues.
The Trump administration said the terminal’s approval would help make the U.S. a “dominant” energy force in the world.
“This announcement is another example of President Trump’s leadership in making the United States an energy dominant force,” Energy Secretary Rick Perry said in a press statement. “This is not only good for our economy and American jobs but also assists other countries with their energy security.”
U.S. energy ascendancy will have political implications in Europe where about half the continent’s natural gas supply comes from state-owned Russian companies. Foreign policy experts see U.S. gas exports as a way to undermine Russia’s energy dominance in the region.
“If the LNG should flow to Europe, then it might have a marginal impact on the diversity of gas supply into Europe,” Richard Kauzlarich, former U.S. ambassador to Azerbaijan and Bosnia, told The Daily Caller News Foundation.
“Russia remains the most important supplier of natural gas to Europe and has no intention of giving up market share to the US or any other potential exporter,” Kauzlarich said. “The result will be cheaper Russian gas in the European market — and potentially increased European dependence on Russian gas.”
Russia has used its gas as a political tool to keep Eastern European countries on a tight leash. Russia interrupted natural gas supplies at least three times since 2006 to put political pressure on Eastern European countries, like Ukraine, Poland and the Baltic states.
“It is too early to say where the gas will go,” Kauzlarich said. “Up to this point, most gas exports have stayed in the Western Hemisphere. There have been limited ‘test’ LNG shipments to Europe. Of course, Asia remains an opportunity, but other LNG exporters are eying that market as well.”
Kauzlarich sees Asian countries as future major consumers of U.S. gas exports. The former ambassador previously told TheDCNF China will keep importing lots of LNG, but isn’t sure if that country will accept rising dependence on U.S. energy.
U.S. consumers would deal with minimal costs to export LNG and it would lead to huge economic benefits, according to a study published in December 2015 by the DOE. The study found exporting American LNG would provide huge environmental benefits as well. The report states exporting LNG will help “address a variety of environmental concerns in the power‐generation sector.”
Exporting natural gas is likely to be a growth industry, as global demand for natural gas is expected to be 50 percent higher by 2035 than it is now, according to the International Energy Agency. Demand for imports of LNG increased 27 percent in the United Kingdom last year alone.
(Editor’s note: This post has been updated to reflect the correct amount of natural gas shipped)
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