The next phase of the natural gas revolution is exporting liquified natural gas.
“The opportunities for the American economy are huge for exporting LNG,” said Jamie Gates, senior vice president of the Conway Area Chamber of Commerce. “Obviously we would see some benefit locally, but globally it makes the U.S. economy much more competitive.”
In February the Conway Area Chamber of Commerce was in Washington lobbying for the export of LNG. It’s specifically beneficial for the Fayetteville Shale, Gates said.
There are two types of natural gas, wet gas and dry gas, but only one is found in the Fayetteville Shale. Arkansas natural gas is extremely dry, meaning it is essentially pure natural gas with a bit of methane.
Wet natural gas on the other hand, has compounds such as carbon based petroleum used to make plastic in addition to methane.
With wet natural gas, if the price of natural gas goes down, other natural gas producers can still make a profit by selling the other compounds at a premium price.
Arkansas’ dry natural gas is perfect for exporting, Gates said, because those other compounds don’t have to be separated from the natural gas.
“The energy industry has delivered for Arkansas’ economy and new opportunities like LNG or LNG exports are two examples of how we can continue to grow our place in the world’s economy,” he said.
“Arkansas can say, ‘Hey man, we’ve got some dry natural gas. It’s coming in. You don’t have to do anything. It’s ready to liquify, and put on the boat,’” he said.
It’s likely the next refineries natural gas will travel to, Gates said, will be along the Louisiana and Texas coasts with Arkansas being much closer than natural gas producing states like North Dakota.
“We’re not so far by pipe, so we’re closer with better gas — buy our stuff,” he said.
“Many Arkansans have the perspective that this is our resource and we’re going to be using it here in Arkansas, but that’s no longer the case because we’re going to be sending it off,” said April Lane, cofounder of ArkansasFracking.org, an organization founded to address the negative impacts of the extraction of natural gas in the Fayetteville Shale.
According to a report from the University of Illinois Department of Nuclear, Plasma and Radiological Engineering, the U.S. is expected to export LNG by 2012 to 2016 from McAllen, Texas, and other LNG ports are in the stages of permitting. Natural gas is priced in Japan at about $18 per million British Thermal Units, compared to $3.78 in the U.S. and $11.83 in Europe.
Faulkner County Judge Allen Dodson said several of the companies in the area are beginning to invest in production in preparation for exportation.
As more stations are built and the supply has been dispersed and begins to run low, the demand for natural gas will be high, and the natural gas industry will increase the price, Lane said.
“All the studies we’ve looked at, for example exporting LNG, the economic benefits far outweigh any impact to the modest price increases that could be forecast,” Gates said.
Plus, low natural gas prices have helped feed some of the manufacturing growth and recovery we’ve seen in America over the last few years, Gates said, and they probably get most of the credit for the rebirth of the American steel industry.
Those interests don’t have to compete with each other, he said.
But Lane said she thinks the LNG industry will follow the same model as the petroleum industry.
“We will see the day were we pay more for natural gas per gallon than we pay for a gallon of milk,” Lane said. “When that day comes people are going to be in a pickle, and they will be shocked that we didn’t see this day coming.”
(Staff writer Michelle Corbet can be reached by email at email@example.com or by phone at 505-1215. To comment on this and other stories in the Log Cabin, log on to www.thecabin.net. Send us your news at www.thecabin.net/submit)