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  • Writer's pictureOil Patch Press

Natural Gas Drilling and Production About to Skyrocket!

Updated: Aug 25, 2018

I’ve held off writing this week’s blog because Trump was scheduled to meet with a leader of the European Union, to tamp down the heat rising from the looming tariff war.

At the White House meeting today, Trump pushed expansion of our domestic energy industry by working a deal with the EU to import LNG from the U.S. instead of placing itself at the mercy of Vladimir Putin. The European Union is poised to self-destruct by relying solely on Russian gas deliveries via a Russian pipeline. How easy it would be for Putin to use withholding natural gas deliveries in order to force EU cooperation on anything Putin could dream up? And America is on the hook to defend Europe from Russia, should it take steps to overtake any part of it, not unlike it overtook Crimea?

Trump is right: the EU would be a “very big buyer, a massive buyer” if they will agree to forego the Russian pipeline and import LNG from the U. S. instead. The United States is the Saudi Arabia of the world when it comes to natural gas. We have the largest proven amount of natural gas within our borders than any other country on earth right now.

The problem is, we don’t have nearly enough LNG tankers we can load with LNG to export to the EU. And it’s going to take time to build them.

The GAO did a comprehensive study 3 years ago, addressing the viability of U. S. shipyards building LNG cargo vessels for exporting LNG on a large-scale. The challenges identified by the Government Accounting Office were all related to lack of ships designed for transporting LNG.

The Jones Act of 1920 requires cargo ships to be built in the U.S., owned by American citizens, and to operate under the U. S. flag. As of 2015, and still today, virtually all LNG cargo vessels for transporting LNG are built in other countries, not America, but documented under U.S. laws. The Howard Coble Coast Guard and Maritime Transportation Act (Act) of 2014 was signed into law by President Obama in December, 2014, to facilitate building LNG tankers here.

The Coble Act requires all LNG exports after December, 2018 to be transported by vessels built in the United States, to be owned exclusively by U. S. citizens, and to operate under the U. S. flag. But here we are, in July of 2018, and how many U. S. shipyards are actively building LNG tankers? See

We have a growing number of LNG export terminals, but a limited number of transport vessels. Right now, virtually all LNG is being “bunkered”, meaning it’s being provided to cargo ships that use LNG as the primary fuel. These cargo ships don’t transport LNG, they only run on it. Bunkering is what has driven natural gas production and pricing for the past three years.

South Korea currently builds most LNG cargo vessels, because Asia is the leading consumer of LNG as of 2018. The largest shipyard there is owned by Hyundai. China has now jumped into the foray, having already established LNG tanker shipyards.

There are at least 11 large U. S. shipyards that the GAO contacted for its report published in 2015. These shipyards responded favorably in adding LNG carrier shipbuilding to their operations. Those shipyards currently don’t build LNG cargo vessels. An LNG cargo vessel must keep its LNG cargo at very high pressure, at minus 260 degrees Fahrenheit while sailing to its destination. See

According to The Maritime Executive in 2015, some 100 new LNG transport vessels are needed in the next 30 years in order for the U.S. to export even a modest amount of U. S. natural gas to foreign markets. See That article was written long before President Trump met with EU President Jean-Claude Juncker at the White House today.

If America can solve the logistics bottleneck of not having enough LNG tankers, and solve it quickly, the resulting natural gas exploration and production boom would dwarf what we saw in the late 1990s to mid-2000s. Oil may still be the darling of the day right now, but very soon landowners everywhere could be showered with natural gas royalties like we’ve never seen before.

But can we solve the bottleneck and begin exporting LNG in quantities large enough, and soon enough, for the EU to turn away from its impending deal with Gazprom?

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