US Energy Sec on Challenging Trip to Japan, China
As a 12th LNG export project is approved, US marketers have their sights set on Asia. Yet US Energy Secretary Rick Perry’s visit to Tokyo, June 1, to promote US LNG sales coincided awkwardly with President Donald Trump’s announcement that he will put the US out of the 2015 Paris climate accord.
In the six months to March 2017, US exports to Japan were 25.4bn ft3, making it the third largest US LNG export market after Mexico and China.
Orders from Japan, the world’s largest overall LNG importer, are irregular though, because redundant long-term import contracts have left Japanese markets oversupplied. This is may explain why Perry chose to visit Japan and then China.
In a statement from the Japanese capital, Perry sought to limit the political fallout in Asia from Trump's June 1 declaration.
“The President announced that the United States will no longer be bound by an agreement unilaterally entered into by the Obama Administration. This was neither submitted to nor ratified by the US Senate, and is not in the best long term economic interest of the US President Trump’s decision will prove to be the right course of action and one I fully support.
“Instead of preaching about clean energy, this Administration will act on it. Our work and deeds are more important than empty words. I know you can drive economic growth and protect the environment at the same time, because that is exactly what I did as Governor of Texas.
“The US will continue to be actively engaged in the development of global energy and the world leader in the development of next generation technology. That is exactly why I am traveling to Japan and China to discuss the benefits of all forms of energy, including nuclear, fossil, LNG and renewables. I also plan to discuss technological advances such as carbon capture that can leverage the abundant resources we have available in an environmentally responsible way,” said Perry.
US LNG shippers meanwhile are not putting all their hopes in one basket. In May, Cheniere Energy, currently sole US LNG exporter, applauded a new trade deal by the Trump administration encouraging China, which boasts the fastest-growing LNG market in the world, to purchase more US cargoes.
That same month, Cheniere exported 18 LNG cargoes from its Sabine Pass terminal – the highest 30-day total since the facility opened last year.
Delfin LNG approved by US DOE
New projects will boost US LNG export capacity in the coming years. As of June 1, the US Department of Energy (DOE) has approved 12 new export terminals with a total export capacity of 21bn ft3/d, setting the US on course to become a net natural gas exporter by 2018, with the third-largest LNG export capacity by 2020.
The 12th terminal to be authorized by the DOE was on June 1: the US’ first offshore project, Delfin LNG located off Louisiana in the US Gulf, which has an export capacity of 1.8bn ft3/d.
In a statement, DOE said: "America’s shale reserves have generated economic growth and jobs across the US. Utilising this clean energy source has also enabled the US to achieve the largest drop in carbon emissions of all countries in 2016. DOE is eager to bring this clean burning resource and its benefits to all of our international trading partners. Secretary Perry will take this message to Japan, and then to China for the Clean Energy and Mission Innovation ministerials, where he plans to strengthen the US-China LNG export partnership and continue working together towards a clean and affordable energy future."
DOE repeated that macroeconomic studies that showed positive benefits to the US economy in scenarios with LNG exports up to 28bn ft3/d, adding: "The department determined that exports from the Delfin LNG terminal, jointly owned by the India and Singapore-based Fairwood Group and the US-based Peninsula group, for a period of 20 years was not inconsistent with the public interest."
US LNG exports accounted for only 8% of total US exports of natural gas in 2016 but, as the DOE projects, that share will rise. Of the remaining 92% exported by pipe last year, almost two-thirds (64%) went to Mexico while 36% went to Canada. Latest government data shows total export volumes reached 273bn ft3 in March – the highest monthly figure since records began in January 1973.
Zainab Calcuttawala