Shippin' Shale: Energy Independence Means Exporting It So We Can Import It. Got That?

Categories: Biz

Mind Blown.jpg
Yeah, it doesn't make sense to us either. A couple of weeks ago we asked if America could stop pretending that politicians and their benefactors in the energy industry actually give two shits about "energy independence" or "energy security," or any of the other portent-laden, focus-grouped catch phrases they lob at us.

Reason being, a Houston-based company just won approval to begin exporting shale gas -- the vastest source of domestic fossil fuel we have -- to other countries. This was supposed to be the Methadone weaning us off of that Middle Eastern smack while we figure out the whole renewable thing.

Lawmakers, including the most senior member of the House Natural Resources Committee, worried that exporting this natural resource would accomplish nothing but increasing our dependence on foreign fossil fuels, raising energy costs for the rest of us and squandering a cleaner-burning way to keep the lights on. Turns out, he's probably right.

According to the Energy Information Administration, gas prices at the wellhead may increase by as much as 57 percent, which is exactly the point. Natural gas prices have been in the dumps since 2008, reducing the commercial viability of shale plays like the Barnett here in North Texas, and the Marcellus up in Pennsylvania. Things are so bad even shale cheerleader Chesapeake Energy announced Monday that it's slashing spending on gas fields after natural gas prices hit a 10-year low at $2.231 per million British Thermal Units. It's why everybody's in South Texas now, where there's oil and condensate in the shale going for around a bill a barrel. But if you can open new markets up for your gas, increase demand and the price.

It's gonna suck for you and me, because as a result, we'll pay higher utility and heating rates, the agency reports.

But the EIA also points out an insidious side-effect we didn't see coming. The whole point of shale gas as a bridge fuel is that it burns cleaner the coal. When we export natural gas and its price gets jacked up, electricity generators will lean harder on coal. Back to square one.

The other ironic-as-hell consequence is that we'll have to import natural gas, primarily from Canada. So, let's recap: Shale gas is vital to our energy independence, the energy industry and politicians tell us repeatedly. But it's cheap right now, which is great for us and shitty for the industry, so they're exporting that asset so vital to our national energy security, raising both the price of gas and electricity while making us more reliant on foreign sources of energy. Because we sold ours.

And yes, Rick Perry, natural gas, even from Canada, is foreign.

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28 comments
Edgar
Edgar

What's the difference between (1) us exporting it overseas and replacing that lost supply with Canadian imports and (2) us using our supply and Canada exporting it overseas?  Canada doesn't have the terminals that can be reconfigured, so we have a head start, and we would stand to gain the jobs.  If that doesn't happen, then Canada could build the export terminals.  Gas produced here gets burned somewhere whether we transship or not.

Steve T
Steve T

Max

No one I know wants to "shut the whole thing down"; I for one just want people to acknowledge all the costs; and have an honest discussion about what is really worth producing, especially of a non-renewable resource that we'll have to stop relyinig on eventually.

Max from the Sandspit
Max from the Sandspit

God I love y'all's mentality. The product is going for 2.50 an mcf here, cost to produce is around 3.25 an mcf, so they're loosing money. Export to the EU as LNG where it brings around 12.00 an mcf makes economic sense.   Besides you Gaslander's wanna shut the whole thing down over a c-movie and some hazy assertions by some Political Science gurus. But not to worry, The Chosen One gets another term all y'all will be scavenging for cow and horse shit to cook your meals over. Just like they still do in southern Iran, cept they use camel shit picked up along the trail.  

TXsharon
TXsharon

And all you mineral owners out there who think you will reap the rewards of you gas that is sold in Asia for $14.00/Mcf, guess again. Check out your lease agreement. I'm betting it says Henry Hub is the price you get. The only ones getting rich off shale gas are people like Aubrey McClendon.

And, about all that shale oil... Anadarko just had a big announcement: " Anadarko Petroleum Corp., for instance, recently announced that up to 1 billion barrels of crude could be extracted in areas it controls in the Niobrara." Sounds like a lot, huh? Yeah, it's about a 2 months' supply. 

Steve T
Steve T

This situation exists because the US has not nationalized its energy industry.  This is one reason why the goal of energy independence is not possible unless we do; the phrase is a political cliche used by politicians to sound patriotic, but its effect is to enrich the oil and gas industry, which is already far more subsidized by the government than aternatives (typical Republican position--privatize the profit, put the risk on the average taxpayer--just like the financial industry) .

I'm not arguing for nationalization--that has its own problems; but the fact is at least 85% of all oil is produced by nationalized companies, not private ones (private includes "big oil"--Exxon, Chevron, Shell, Total, etc.).  Not sure about natural gas, but I suspect its similar. For a more objective and nuanced view of this subject I suggest you read theoildrum.com and energybulletin.net.

WCGasette
WCGasette

But not once does the industry admit that there are big "issues" with all of it. Just that the price has dropped so they just need to stop drilling for awhile.

Mister_Mean
Mister_Mean

In the interest of energy self sufficiency (of which the politicians have been moaning about) there should be a prohibition against exporting any oil or natural gas outside the North American continent

dallasdrilling.wordpress.com
dallasdrilling.wordpress.com

While people like Dallas Cothrum of Masterplan pimps for the industry here in Dallas, the lack of interest from Dallas citizens will continue to set up a situation that will come to bite us all in our contaminated ass.He and the industry have no shame in their pursuits of contaminating whats left of Dallas,while the rest of us should have nothing but outrage.

So, where's your outrage?

Ed D.
Ed D.

Third world countries are routinely stripped of their natural resources by corporations, damn the economic or environmental consequences to the natives. What's new is that the third world country getting stripped is us.

claytonauger
claytonauger

So providing cheap energy to the Chinese is reason enough to endanger public health here.  Dallas own gas drilling task force is having its final round of meetings. This issue is going to get up close and personal for Dallas this year.

Dougsterfresh
Dougsterfresh

Hate to tell ya Max, no matter how you construct an argument, if you use the word "loosing" rather than "losing", you will never be respected. Just trying to help you gain some future cred.

cockadoodledoooo
cockadoodledoooo

I hear the camel turds give your meals a "smokier" taste....have you heard the same?

Edgar
Edgar

Henry Hub price would rise if gas were sold elsewhere at higher prices.  Turning gas into a fungible commodity promotes arbitrage.

Montemalone
Montemalone

Huh? wha? whachutalkinboutwillis?That's unnuh marekin.

pak152
pak152

your statement just confirms what was in this editorial"From a public relations standpoint, the opponents of fracturing are winning the debate because they have a simple and effective message that sows fear of an industry that Americans are predisposed to loathe. It could easily fit on a bumper sticker: “Big Oil wants to pollute your water.” The mere notion scares people."http://www.nydailynews.com/opi...

http://mjperry.blogspot.com/20...

Gangy
Gangy

The Dallas Gas Drilling Task Force is meeting tomorrow, the 24th, from 2-5 pm at Dallas City Hall on the 6th floor.  To save our city's water supply, air supply, and roads, please attend this meeting.  All you have to do is be a citizen in the audience.  The leading activists on this issue will provide signs and guidance on how and when to silently express approval/disapproval.  You don't have to be at the entire meeting.  Come for however much time you have available to protect our city.

pak152
pak152

"Third world countries are routinely stripped of their natural resources by corporations, damn the economic or environmental consequences to the natives"

proof or speculation? have verifiable examples?

pak152
pak152

"So providing cheap energy to the Chinese is reason enough to endanger public health here"

proof? or just pure speculation?

cockadoodledoooo
cockadoodledoooo

I guess you could say that the, political landscape, here is going to get a little "contaminated" with all the "toxic" fumes that will be emanating from the pollutitions, I mean, politicians mouths.

Max from the Sandspit
Max from the Sandspit

Yeah was dealing with some Zeta and MS-13 issues, plus a big glass of Scotch and ain't been able to figure out how to make spell check work on this forum.

TXsharon
TXsharon

Henry Hub would not rise based on Asian gas prices. Get real!

RC
RC

If you don't show up, you can't complain later.

DoubleOJoe
DoubleOJoe

Verifiable examples?  Port Harcourt, Nigeria.  Turns out all that oil and gas revenue doesn't do a thing to improve the lives of citizens.

Ed D.
Ed D.

You're joking, right? Look at the Middle East in the mid-20th century or Google "conflict minerals" or "chocolate slavery" for modern takes. Want something closer to home? Look at the economic history of the American colonies before the revolution.

Guest
Guest

For several years the salt dome business has been growing. Pump the gas in for storage, and pump it out for export, either to US customers or overseas. Several large salt domes have been built near the Herny Hub. 

Edgar
Edgar

Oh yes it would.  Henry Hub would be connected by pipeline network to the export facility.

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