I hadn't heard of the free trade angle up until this point. The best way to get free trade going with another country is to sell them something at a market price.
Dominion Resources Inc.'s natural gas shipping dock a mile out in Maryland's Chesapeake Bay is nearly devoid of workers. Instead, scores of sea gulls perch on a narrow pipeline above one section of the steel and concrete deck. A flock of black cormorants claim the railing on the next deck over. Dismembered crabs are scattered about.
Though the facility named Cove Point is nearly deserted now, the energy company said it spent $200 million to buy it a decade ago and another $800 million so Cove Point could distribute natural gas to the Northeast. Since then, domestic shale gas supplies have flooded the U.S. market and the import business has virtually disappeared. Dominion wants to save its investment with federal permission to start piping gas from Pennsylvania and Appalachia to Cove Point, load it on tankers and ship it abroad.
Dominion is among 17 companies trying to build the continental United States' first-ever natural gas export terminals. Most await a delayed federal judgment on whether they can ship gas to countries with no free-trade agreements, a hot-button issue in an election year. The company also faces an environmental lawsuit and a competitive global market, potentially bigger obstacles than the politics.
The controversy started in the spring of 2011 when the Department of Energy approved a Louisiana terminal for 2.2 billion cubic feet of natural gas exports per day, most of which will go to a Chinese firm when completed in 2015 or 2016. Several other companies, including Dominion, then applied for export permits, sparking claims that the practice could increase prices for U.S. consumers or hurt the country's energy security.I'm of two minds here. I generally favor free trade, but low natural gas prices is encouraging a shift in electrical generation from coal (not a very clean fuel) to much cleaner natural gas. I want to encourage that. Let the Chinese learn to frack on their own, and they'll probably help drive down the price of gas even further and clean up their own incredibly power industry. But I'd like to see the Cove Point Gas Docks active again, too.
"No one anticipated how much gas we would find. And no one anticipated this would result in such depressed gas prices for such a long time," said Rick Roberge of PricewaterhouseCoopers' energy mergers and acquisition division in Houston.
U.S. gas futures were worth nearly $5 per million British thermal units (MMBtu) in the spring of 2011, but have averaged about half that this year because of oversupply, largely because of drilling in the Marcellus shale and wells in Western Pennsylvania. That pushed gas drillers to slow down across most of the country, even with gas selling in Asia at more than four times the U.S. price. Without access to those overseas markets, low prices in the United States will keep restricting that growth, experts said.