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Swimming In Energy: US Shale Boom Drives $120B In LNG Export Projects

Wendy Koch, America's Markets

As U.S. production of natural gas soars, companies are investing $120 billion in North American export projects that could increase domestic gas prices, new research says.

They’re rushing to grab a slice of the booming global market for liquefied natural gas, which has doubled in volume in the last decade, according to analysis this week by Lux Research, a Boston-based technology research firm. Despite the increase, the hunger for LNG has outpaced production, causing higher prices and a seven-fold jump in the value of this trade since 2002 to $170 billion in 2012.

In the United States alone, 31 facilities have applied for federal approval to build export facilities, which condense natural gas into a liquid before it’s shipped overseas via tanker. Since May 2011, six of them — two in Cameron Parish, La., one in Lake Charles, La., one in Texas, one in Maryland and one in Oregon — have received conditional approval. Only one, Cheniere Energy’s Sabine Pass Liquefaction terminal in Cameron Parish, has received the final construction go-ahead and is slated to begin operation next year.

The potential impact could be huge. Though not all of these projects will likely come to fruition, Lux analyst Daniel Choi says their combined capacity could export nearly 30% of U.S.-produced gas by 2020. Much of this gas is extracted from shale deposits via the combined use of horizontal drilling and hydraulic fracturing or fracking. […]

The Lux report says Australia is set to pose the largest threat to U.S. exports. It says Australia has pumped $180 billion into LNG export investments and is expected to rival Qatar as the largest LNG exporter by 2017. Also, it says China has significant shale gas reserves, and Argentina has reserves that are five times greater.

The analysis  says LNG is targeted to replace diesel, mainly as a transportation field but also for off-grid power generation.  LNG costs up to 25% less than diesel in many countries though it has extra storage and distribution costs.

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