Natural gas suppliers from Sempra Energy (SRE) to Exxon Mobil Corp. (XOM) are fighting for the first U.S. export permits after a study said selling some of the fuel to Asia will benefit the economy more than consuming it domestically.
They could win approval for projects to ship about 6 billion cubic feet a day of liquefied natural gas by 2025, according to estimates by consultants including Tudor Pickering Holt & Co. That amount of LNG would supply about half the current U.S. residential market and is worth $93 million a day at Japan’s current import price, a global benchmark.
The government-sponsored study released Dec. 5 gave a green light to exports, saying they shouldn’t delay North America’s possible energy independence in coming decades based on shale discoveries. Companies from Exxon to Dominion Resources Inc. (D) are rushing to get export permits in time to take advantage of the lower production price in the U.S. compared with other markets.
“The reality is that LNG projects are quite difficult to deliver,” Elizabeth Spomer, a senior vice president of business development for Reading, England-based gas producer BG Group Plc (BG/), said in a statement. “This is due to a host of factors — from regulatory obstacles to the challenges associated with financing and construction.”
The 6 billion cubic feet a day estimate represents about a fifth of the projects that companies are proposing, measured by LNG capacity, as regulatory hurdles and competition limit building.