AmericanNaturalGasNotForAmericans

SometimebetweenDecember2013andJanuary2014,
CheniereEnergyisexpectedtocompletetheSabine
PassTerminalinCameronParish,Louisiana.The
SabinePassTerminalisinoperationforimports,
Chenierehasaddedliquificationcapabilities,and
transformeditintoabidirectionalfacility.The
terminalwillbecapableofhandlingimportandexport
ofnaturalgas.
CheniereisalsointheprocessofdoingthesameinCorpusChristi,Texas.
OnDecember5,2012,theDepartmentofEnergys(DOE)OfficeofFossilEnergypostedthefinalNERA
reportintothe15pendingexportapplicationdockets.AccordingtoanupdatedlistofApril2,2013the
DOEhasreceivedatotalof26applicationstoExportDomesticallyProducedLNG(pdf).TheSabinePass
Terminalistheonlyoneapproved,therestareunderreviewandifapprovedconstructionisexpectedto
startaround2017.
RememberthehypeaboutAmericanNaturalGasforAmerica?Thegluthappened,thehypechangedto
NaturalGasLiquids(NGL).CorporationsdrillinginnortheastPennsylvaniarushedtowestern
PennsylvaniaandOhiotofrackforNGL.ThenagluthittheNGLmarkets.Quick,changethehypeto
frackingforoil.Andyouthoughtweweregoingbebreakingtheoilhabit.
Frackedoilisntturningouttobeallthatgreat,thehypeisbiggerthanreality.Now,whatwassuppose
tobeAmericanNaturalGasforAmericanshasturnedintoarushtoexport.
FOREIGNINVESTORFEEDINGFRENZY
Jointventures,outrightsalesofshaleacreageandacquisitionofAmericanNaturalGascorporationsby
foreigninterestshavebecomecommonplaceAnumberofUSNaturalGascorporationshaveseveral
dealswithmultipleforeigncorporations.
InNovemberof2011,ReutersreportedChesapeakeCEOOpposesUSLNGExports:
TheheadofChesapeakeEnergy,oneofthebiggestU.S.naturalgasdrillers,doesnotwantthecountry
toshipitshugegasreservesoverseas,despiteagreeingtosupplyfuelforaproposedexportproject.
RecordU.S.naturalgasproductionhassparkedadebateaboutwhethertheresourceshouldbeused
moreathome,potentiallyforwideruseintransportation,orshippedabroadtofetchhigherpriceson
theglobalmarket.
Iwanttherighttoexportnaturalgas,butIamreallyhopefulthatweneverdo,saidChesapeakechief
executiveAubreyMcClendonduringapaneldiscussiononnaturalgasvehiclesinNewYorkon
Wednesday.
Thisisflipflopfroma2010articleintheOil&GasFinancialJournalwhereMikeStice,seniorVPfor
NaturalGasprojectsatChesapeakeurgesforthebuildingofliquefacationfacilities.
SticeindicatedthatChesapeakeisinveryseriousdiscussionswithregulatorsandhassigneda
memorandumofunderstanding(MOU)withterminaldeveloperandoperatorCheniereEnergyof
Houston.Cheniere,whichhasproposedbuildingliquefactionfacilitiesatitsimportterminalinSabine
Pass,La.,previouslysaidthatChesapeakeexecutivessaidtheywerewillingtosendasmuchas500,000
Mcf/dofgastotheproposedfacility.
ChesapeakecurrentlyhasdealswithStatoil(Norway),Total(France),ChinaInvestmentCorporation
(China),CNOOC(China),Hopu(China),Sinopec(China),BHPBilliton(Australia),KoreaInvestmentCorp
(S.Korea),andTemasekHoldings(Singapore).
WiththeearlyretirementofthenowformerCEO,AubreyMcClendon,Chesapeakeisattemptingto
getitsfinancesinorder.ChesapeakeisconcentratingondrillingforoilintheUticaShaleregionsof
WesternPennsylvaniaandOhio.
RELATED:AMERICAFORS(h)ALE
TheUSEnergyInformationAdministration(EIA)issuedabriefstatementregardingForeignInvestors
PlayLargeRoleintheUSShaleIndustry.
Inearly2013,Sinochem,aChinesecompany,enteredintoa$1.7billionjointventurewithPioneer
NaturalResourcestoacquireastakeintheWolfcampShaleplayinWestTexas.Thisinvestment
highlightsarenewedtrendtowardforeignjointventures.Since2008,foreigncompanieshaveentered
into21jointventureswithU.S.acreageholdersandoperators,investingmorethan$26billionintight
oilandshalegasplays.
InvestmentinshaleplaysintheUnitedStatestotaled$133.7billionbetween2008and2012,aspartof
73deals.Jointventuresbyforeigncompaniesaccountedfor20%oftheseinvestments.Therestofthe
investmentswereeitherpartofoutrightacquisitionssuchastheAustralianBHPBillitonoilcompany's
acquisitionofPetrohawkEnergyCorp.orwerejointventuresamongAmericancompanies(suchas
HessandNobleEnergywithConsolEnergy)andfinancialinstitutions.

AFEWOFTHEFOREIGNPLAYERS
In2010,RelianceIndustriesLimited(RILIndia)purchaseda45%stakeinPioneerNaturalResources
Eaglefordgasfieldfor$1.3billion.RIL,throughitssubsidiaryRelianceEaglefordUpstreamLP,willgeta
45percentstakeinPioneer'sshalegasfieldintheEagleFordregioninsouthTexasbymakinganinitial
paymentof$263million.RILhasalsoagreedtoinvest$1.052billiontowardsdrillingcostsoverthenext
fouryears.
SIDENOTE:PioneerNaturalResourceswasformerlyMesaPetroleum,ownedbyT.BoonePickens.
WhenMesaPetroleumwasonthevergeofbankruptcy,aprivateequityfirm,RainwaterInc.,purchased
itandrenameditPioneerNaturalResources.
RILhadanagreementtoacquireAtlasEnergyResources,LLC.in2010,butChevronbeatthemtoit.
Nov2010:ChevronCorporationandAtlasEnergy,Inc.announcedthatChevronwouldacquireAtlas
Energyforcashof$3.2billionandassumedproformanetdebtofapproximately$1.1billion.The
acquisitionwillprovideChevronwithanattractivenaturalgasresourcepositionprimarilylocatedin
southwesternPennsylvania'sMarcellusShale.TheacquisitionissubjecttocertainAtlasEnergy
restructuringtransactions,approvalbyAtlasEnergyshareholdersandregulatoryclearance.
Whenthetransactioncloses,ChevronwillgainAtlasEnergy'sestimatedninetrillioncubicfeetofnatural
gasresource,whichincludesapproximately850billioncubicfeetofprovednaturalgasreserveswith
approximately80millioncubicfeetofdailynaturalgasproduction.TheassetsintheAppalachianbasin
consistof486,000netacresofMarcellusShale;623,000netacresofUticaShale;anda49percent
interestinLaurelMountainMidstream,LLC,ajointventurewhichownsover1,000milesofintrastate
andnaturalgasgatheringlinesservicingtheMarcellus.AssetsinMichiganincludeAntrimproducing
assetsand100,000netacresofCollingwood/UticaShale.
Feb2011:RelianceIndustries(RIL)gotanewpartnerforitsMarcellusShalegasassetsintheUS,asAtlas
EnergyshareholdersapproveditsmergerwithChevronCorporation.RILagreedtopay$1.7billionfor
thesaidworkinginterestintheunderlyingshaleasset,MarcellusShale.Thisincluded$340million
upfrontcashpaymentand$1.36billiondrillingcarry.
2010:CarrizoOil&GasannouncesnewMarcellusjointventurewithRelianceIndustriesLimited(RIL)
andtheparticipationinthesaleofAvistaCapitalpartners'PennsylvaniapropertiesCarrizowillserveas
thedevelopmentoperatorforthejointventureandReliancehastheoptiontoactasadevelopment
operatorincertainregionsinthecomingyearsaspartofthejointventure.
WHATSUPWITHBRIDGEFUEL?
Themarketpriceforexportingnaturalgasismuchhigherthanthedomesticprices.Itsanobrainerthe
corporationsaregoingtobesellingwheretheycangetmoremoney.Eventually,asAmericanNatural
Gasisexported,domesticsupplieswillshrink(theregoestheglut)andthehypeaboutCHEAPnatural
gaswillfadeasdomesticpricesrise.
Butbutbut.WhathappenedtoNaturalGasasabridgefuel?Forgetaboutthat.

December2012:DOEReportAffirmsRoleofNaturalGasasaFoundationFuel
Washington,D.C.ArecentreportcommissionedbytheU.S.DepartmentofEnergy(DOE)entitled
MacroeconomicImpactsofLNGExportsfromtheUnitedStatesaffirmsthepositionofnaturalgasasa
foundationfuelfortheUnitedStatesandthenationsenergyfuture.TheAmericanGasAssociation
(AGA)isencouragedtoseeDOEexaminingtheimportantrolethatnaturalgaswillserveinournations
energyandeconomicfuture.

FromEnergyinDepth,theIPAApublicrelationscampaign:PresentationsfromoilandgasexpertGreg
SovasandKarenMoreau,ExecutiveDirectoroftheNewYorkStatePetroleumCouncil,supported
Coolidgesremarks.SaidSovas,Naturalgasisthefoundationofourenergyplanforthefuture.Itsnot
abridgefuel.This(developingtheMarcellusShaleinNewYork)maybethebiggestdevelopment
opportunityofourgenerationfortheeconomicallydepressedSouthernTier.
Related:NaturalGasnotaBridgeFuelAnymore
CLASHOFTITANS
MARCELLUSSHALECOALITION:ALLOW
UNFETTEREDEXPORTSbyDeborahRogers|
EnergyPolicyForum|January2013
U.S.NewsandWorldReportpublishedanarticleentitledShouldtheU.S.ExportNaturalGas?The
articlebeganwiththerevelationthatsomeleaderswithintheenergyindustryitselfarequestioningthe
benefitsofexportation.TheyareapparentlyconcernedaboutausingourfiniteU.S.resourcestogrow
foreigneconomies.
U.S.NewsandWorldReportstate:
UnrestrictednaturalgasexportscouldhavedisastrouseffectsontheU.S.economy,energyindustry
leadersarguedThursday,warningthatshippinglargeamountsofthenationsnewlyabundantresource
wouldresultincripplingpricehikesforAmericanconsumersandmanufacturers.
So,apparently,thereisdissensionamongtheranks.
Justwhoisaproponentofexportation?
Thoseinfavoraretheveryshalecompaniesthatarebleedingredallovertheirbalancesheets.
Exportationisunequivocallytheirhighestandbesthopeforcontainingtheirlossesandhavingany
semblanceofnormalitycomebackintotheircorporateplansforunconventionalgas.Nevermindthat
theyoverproduced,overleveragedandoverhypedtheirproduct.Nowtheyareintroubleandneedto
berescued.Thequestionis,ofcourse,whethertheaverageAmericanconsumershouldpayforthe
mistakesofafewimprudentenergyexecutives?
TheMarcellusShaleCoalition,anindustrygroupfundedby300shalegasoperators,manyofwhichare
amongthemostfinanciallytroubledatpresent,recentlysentalettertoEnergySecretaryStevenChu.
TheletterwasanunabashedpleaforDOEtograntallpendingexportapplications,eventononfree
tradeagreementcountries.
ExportingNaturalGasisbeinghypedasaboosterfortheUSEconomy,muchinthesamemanneras
drillingfornaturalgaswasoriginallyhypedasboosterfortheeconomy.
ADepartmentofEnergyreportstatednaturalgasexportscould,intheory,boosttheU.S.economyby
upto$47billionin2020.Thosegainswouldlikelyoutweighthecostsfromhigherdomesticenergy
prices.Yetthereportalsosuggestedthatlargescaleexportsmightnotmaterializeatall.
KEYWORDS:COULD,INTHEORY.
OilandgasgiantslikeExxonMobilandChevronassertthatallowingthemtoexportLNGwouldboost
theUSeconomy.MeanwhileDowChemical,Alcoa,CelaneseandNucorhavejoinedalobbyinggroup
calledAmericasEnergyAdvantage(AEA).AEAispushingtolimitLNGexportstokeepdomestic
naturalgaspriceslowandthiswouldallowtheUStomakeuseofthiscompetitiveadvantagetodrivea
manufacturingrenaissance,sincecompaniesthatusenaturalgasasarawmaterialcanproducegoods
atrelativelylowerprices.
EithersideoftheclashofthetitansdebateofToexportornottoexport,thehypeiscenteredaround
theshiney.Ifweexportitwillboosttheeconomyandtrickledown.Ifwedontexportitwillboostthe
economyandtrickledown.
Wevehadover30yearsoftrickledownhypeinoneformoranother.howsthatbeenworkingoutfor
you?
Whetherweexportornotorjustexportalittle,thepremiseofboostingtheeconomyisdependenton
continuousdrilling.Seldomfactoredintothehypeisthecosttoourwater,air,landandourhealth.
Read:EXTERNALITIESOFSHALES:HEALTHIMPACTCOSTSandEXTERNALITIESOFSHALES:ROAD
DAMAGEbyDeborahRogers.
NooneisgettingrichceptMamaFrack.
Related:WhyDoFrackersHateAmerica?

2013byDoryHippauf