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Liquefied natural gasÌýexporters in the U.S. need high oil and low natural gas prices to have a competitive advantage in the natural gas markets worldwide, saidÌýan expert from U.S. Federal Reserve Bank Sunday.Ìý
"When oil prices are high and natural gas prices are low, U.S. producers who can export LNG are at a competitive advantage,"ÌýMine Yücel, senior vice president and director of Research at FED ofÌýDallas, toldÌýAnadolu Agency.Ìý
Yucel explained thatÌýnatural gas prices are still linked to oil prices in Europe and Asia, andÌýstressedÌýwhen oil prices are high,Ìýnatural gas prices are also high in those regions.
The U.S. natural gas prices are relatively low in comparison toÌýthe rest of the world. The cost ofÌýHenry HubÌýin the second week of May wasÌýaround $2.8 million British thermal unit,Ìýmmbtu,Ìýhowever oil prices for this period wereÌýalso 50 percent lowerÌýcompared toÌýJune 2014.Ìý
"Now oil is down 50 percent, and that lowers the price of natural gas in Europe and Asia. So, the competitive advantage for the U.S. is much narrower," Yücel explained.ÌýÌý
"This is one of the reasons why not all permitted LNG plants are starting construction right away," she added.
There are currently only six LNG terminals that have been granted approvals from the U.S. Energy Department to export LNG to countries that the U.S. does not have a Free Trade Agreement, FTA, with.Ìý
"The energy industry has been complaining that approvals of LNG exports terminals have been very slow. However, it has become somewhat faster last year and this year so far," Yücel said.
- Approved projects in the U.S. to export LNG
Recently, the U.S. government has sped up LNG permits by approving two projects in less than a week.Ìý
On Tuesday,ÌýCheniere Energy'sÌýCorpus Christi Liquefaction ProjectÌýin the U.S. state of Texas became the sixthÌýproject to beÌýapproved. The project will export LNG up to the equivalent of 2.14 billionÌýcubic feet (63 million cubic meters) of natural gas per day for a period of 20 years.Ìý
On May 7, Dominion Resources' Cove Point LNG project in the state of Maryland gained approval from the energy department to export 0.77 billion cubic feet (23 million cubic meters) of natural gas perÌýday for a period of 20 years.
"However, approved permits does not mean the plants will be built," Yücel warned.Ìý
"Building LNG facilities takes time and they are very expensive. That's why we won’t see a flood of U.S. natural gas exports on the market immediately," she added.
Cheniere Energy'sÌýSabine Pass plant will become the earliest project to be completed to export LNG,Ìýat the end of this year or beginning of next year, whileÌýthey are fully contracted out for the next 20 years, Yücel informed.
The project in the state of LouisianaÌýwas the first project to acquire an LNG export permit in 2012Ìýto potentially export 2.76 billion cubic feet (83 million cubic meters) per day.Ìý
"As U.S. gas comes into the market, we will eventually see a global gas market," Yücel said.Ìý
"Europeans and Asians are talking about delinking natural gas and oil prices.ÌýSo, maybe, in fiveÌýyears, we will have a global gas market, like we have in oil," sheÌýconcluded.ÌýÌý
The FreeportÌýLNGÌýterminal in Quintana Island, Texas wasÌýauthorized on Nov. 14, 2014 to exportÌýLNGÌýfor a total volume of 1.8 billion cubic feet (54 million cubic meters)Ìýper day for a period of 20 years.Ìý
Moreover,ÌýCarib Energy’s facility in Florida andÌýSempra Energy’s CameronÌýLNGÌýfacility in Louisiana were approved on Sept.Ìý10, 2014.
Sempra Energy's CameronÌýLNGÌýterminalÌýin Cameron Parish, Louisiana wasÌýauthorized to exportÌýup to someÌý1.7 billion cubic feet (51 million cubic meters) per dayÌýof natural gas for a period of 20 years, whileÌýCarib Energy's facilityÌýin Martin County, Florida wasÌýauthorized to export up to someÌý0.04 billion cubic feet (1.2 million cubic meters) per dayÌýfor a period of 20 years.Ìý
The companies that want to export LNG from the U.S. to non-FTA countriesÌýneed to get approval from the Department of Energy, which grants authorizations unless the proposed gas exports "are not consistent with the public interest."
With the shale boom in 2008, the U.S. has significantly raised its shale gas production, from 2 trillionÌýcubic feet (57Ìýbillion cubic meters) in 2008 to 11.4 trillionÌýcubic feet (323Ìýbillion cubic meters) in 2013, according to the U.S.' Energy Information Administration.
By Ovunc Kutlu
Anadolu Agency
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