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Europe looks to barge into America's cheap natural gas

02.20.2013  |  HP News Services

Keywords: [natural gas] [LNG] [barge] [Europe] [FLNG]

By LIAM DENNING

Like the truth, US natural gas will come out -- provided Washington doesn't block it.

US natural gas trades for a little over $3/MMBtu, while in Europe the price is closer to $12. A supply boom coupled with a lack of export options has kept gas prices low in America. Europe, meanwhile, depends on imports from countries, such as Russia, that demand prices linked to those of oil, which is relatively expensive.

Cheap stuff attracts buyers, and gas is no different. French utility EDF has announced plans to develop floating barges that could liquefy North American gas to be shipped overseas. In theory, this could offer a cheaper, faster way to get US gas on the high seas than some land-based projects.

That remains to be seen. The bigger point to draw from this move is that Europe needs cheaper energy, and its companies are getting creative in how to tap it. In December, Austria's Voestalpine announced plans to build a facility in North America to use cheap gas to make a precursor to steel that will then be shipped back home for final processing.

Europe needs the help. Its power stations are burning more US coal these days, which has been displaced by cheap gas at home. That helps with costs but does nothing for Europe's carbon emissions targets.

Alistair Buchanan, who runs the UK's energy-market regulator, warned again this week that the country's reliance on imported gas to power its electricity grid looks set to intensify, raising energy bills.

Meanwhile, Jonathan Lane of research firm and consultancy GlobalData calculates that German residential consumers last year paid more than 2.5 times what Americans paid for electricity. High renewable subsidies in Germany are a big part of this, but the cheaper underlying cost of gas-fired power also gives US bill-payers an advantage.

Exporting US gas to Europe, undercutting the likes of Gazprom, is a no-brainer from the market's perspective. The question is whether US politicians allow much of it. For them, a gas glut at home means less inflation and a basis for more competitive manufacturing.

Even if EDF and friends build their barges, they may struggle to find a welcoming dock.


Dow Jones Newswires



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Repsol Global License
02.26.2013

Aren't the USA the champions of the free market?

Alag G
02.24.2013

Hello All,
a) Shale gas find in the US:What's the potential availability of gas and also reservoir prospects in TCF (Trillion Cub.Ft) so that one can think of competitive advantage while comparing with 4 times cheaper gas in the Middle East.
b) May be, middle eastern big weights would try to take advantage, thru' innovative foreign direct investment, to test the American market, by way of constructing Petrochemicals ventures.
c) If Gas pricing is linked with Crude Oil pricing, the oil price would plummet and also demand for oil would further go down; Still refinery margins continue to be low, and many small oneswill be out of business.
What are your thought process on the above factors?
Thanks.

Ramesh Nageswaran
02.22.2013

Americas gas should not be exported . The whole infrastructure including electrical power and significant parts of the transportation fuel sector should be converted to gas and liquids made from gas .Foreign companies should be encouraged to utilise gas resources in the USA. A reformed business tax structure will help immensely

r.sridhar
02.22.2013

how gas resource is comparable to liquid resource and solid resource? one need to think if gas is lying under the earth, then earth will be shapeless rather tha solid. I am doubtful that shale gas and natural gas are the real potential energy resource? no wonder at last it would be another big scandal. regret me if it is not in line of truth.

Malcolm Brown
02.21.2013

Let's export our gas so the price we will have to pay will be higher, and we will run out of it faster so our kids will not have any.

Fernando de Tezanos
02.21.2013

Barato por ahora que no hay los suficientes medios de distribución ,al momento que ya existan estas barcazas seguro que le subirán el precio

Ron Wagner
02.21.2013

Natural gas is the future of energy. It is replacing dirty old coal plants, and dangerous expensive nuclear plants. It will fuel cars, trucks, vans, buses, locomotives, aircraft, ships, tractors, air conditioners, engines of all kinds. It costs far less. It will help keep us out of more useless wars, where we shed our blood and money. It is used to make many products. It will bring jobs and boost our economy. It lowers CO2 emissions, and pollution. Over 5,000 natural gas story links on my free blog. An annotated and illustrated bibliography of live links, updated daily. The worldwide picture of natural gas. Read in 74 nations. ronwagnersrants . blogspot . com

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