New Hope to Increase U. S. Natural Gas Sales
An article appearing in the Bloomberg website on April 24, 2019 (https://www.bloomberg.com/news/articles/2019-04-23/trump-jones-act-natural-gas) updates the blog posted in Oil Patch Press on July 25, 2018. That post explained a bit about the Jones Act of 1920 and how it restricts shipments of LNG from American ports.
Two days ago, Bloomberg reported an important meeting President Trump had with advisors and high-level White House officials, where they discussed issuing temporary waivers of the Jones Act. Waivers would allow Puerto Rico to import LNG from U. S. ports—most notably, gas from Pennsylvania gas fields—and help alleviate the ongoing energy shortage there. Puerto Rico continues to struggle to recover from storms and rebuild its infrastructure to begin benefitting from the upsurge in the American economy.
According to writers Jennifer Dlouhy, Jenny Leonard, and Jennifer Jacobs, Trump met with several administrative officials to discuss issuing the waivers, including Peter Navarro and Elaine Chao, who both oppose the waivers, and Larry Kudlow, who favors them.
The most striking factoid given in the article is that right now, due to the Jones Act forbidding transport of LNG from one U. S. port to another U. S. port unless the ship is “U.S.-built, -owned and –crewed”, the U. S. currently imports LNG from Russia! America has been heralded as the Saudi Arabia of natural gas reserves, yet here we are, importing LNG from Russia, of all places?!?
That alone should be strong-enough incentive to grant temporary waivers sufficient to stop the importing of Russian LNG.
America’s natural gas prices have languished, without cost-of-living increase, for the past 20 years at least. I remember attending an industry luncheon around May, 2000, and seeing a power-point slide predicting that, by the year 2015, natural gas base price would rise from it’s then-current $2.90 to more than $6.00.
That has not happened. Nor will it happen, as long as American production surpasses U. S. demand—and we freely cannot ship excess natural gas to under-developed countries most energy-starved. LNG imported to those countries could bring countless of their citizens out of starvation by giving them energy vital for agriculture and food distribution. LNG would fuel industrial growth, allowing the GDP in these countries to rise along with job growth, and providing for fundamental needs such as clean, affordable water supplies.
The U.S. shipbuilding ports are unable to keep up with the demand for the highly specialized vessels required for transporting LNG by sea. Right now, Japan produces the largest number of these vessels annually. But, due to the Jones Act, none of those vessels cannot be used to transport U.S. LNG from any U.S. port to another U.S. port. If natural gas produced in Pennsylvania cannot find a market there, for instance, and cannot find pipeline availability to transport it to other domestic locations, the natural gas is “shut-in” and remains in the ground. When it remains in the ground, it remains unsold, and no royalties are paid to landowners.
I will be watching the news closely to see when President Trump makes a final decision on the waivers, and post an update when I know more. Larry Kudlow has the right idea--let's hope President Trump agrees