Page 5 - NorthAmOil Week 38 2021

NorthAmOil COMMENTARY NorthAmOil

up the cost of natural gas, natural gas liquids double what it was a year ago. This, IECA said,
feedstock and electricity,” IECA said. “This also was costing US consumers some $109bn on an
presents a threat to reliability, national security, annualised basis.
and is a cost and human safety issue.” What is more, US gas stocks are at 7%
The US needs to “shift from an LNG export below the five-year average for this time
driven policy to one that is US consumer-econ- of year, which IECA attributes to a surge in
omy balanced and establishes common sense exports. The US has exported around 10% of
and transparent public interest safeguards as its natural gas this year, which represents a
intended under the Natural Gas Act,” it contin- 41% increase from a year earlier, and there has
ued. “We support a reasoned volume of exports not been a sufficient increase in production to
as long as it does not negatively impact US con- offset this demand.
sumers and the economy as intended under the Prices will need to reach $10 per mmBtu to
NGA.” encourage producers to supply enough gas to
The association also said it was necessary to satisfy demand, the association said.
reconsider the Department of Energy (DoE)’s “At those price levels, as we experienced
decision last year to indiscriminately extend all in 2008, manufacturing demand destruction
approved export agreements by 30 years through occurs,” it said. “Many manufacturers can no
2050, “which purposefully shifts incalculable longer compete in the market at those prices.
risks from LNG exporters onto US consumers.” In 2008, we saw thousands of manufacturing
The Trump administration viewed an expansion facilities shut down because they were no longer
in LNG exports as a cornerstone of its energy profitable.”
strategy. While current high gas prices in Asia and
Furthermore, the US continues to export the Europe are likely unsustainable, the global
bulk of its LNG supplies to countries without a market is expected to remain unseasonably
non-free trade agreement (NFTA) with Wash- tight during the rest of the autumn and the
ington. These same countries often impose trade coming winter, especially in the event of cold
restrictions on US manufacturers, IECA said. weather. There will therefore remain a strong
incentive for LNG producers to export as
“From February 2016 to June 2021, 69% of much as they can.
all shipments were to NFTA countries,” the The DoE is yet to respond to IECA’s request.
trade group said. “When Congress passed the Any significant changes to the NGA or other
NGA, they specifically distinguished shipments legislation are unlikely, although temporary
between FTA versus NFTA countries, implying a measures could be introduced to curb exports
preference for shipments to free-trade countries. in the short term, depending on how tight the
The DoE has ignored this preference.” market gets. Some of the many liquefaction
projects that have been proposed could also
The outlook ahead falter because of environmental opposition –
The winter strip gas price at the US’ main Henry whether in the US or the countries where their
Hub is currently at $5.50 per mmBtu, or about gas is destined.™

Week 38 23•September•2021 www. NEWSBASE .com P5