Pipeline Foes Prone to Exaggerate the Ease and Likelihood of Exporting LNG

If fuel from the Marcellus Shale, perhaps the largest known source of natural gas in the world, is one day shipped through pipelines in Massachusetts and exported as liquefied natural gas (LNG) to Europe or elsewhere, should you care?

Opponents of new and expanded gas pipelines certainly want you to care. More precisely, they want you to be suspicious. 

Pipeline foes never seem to miss an opportunity to claim that the export of LNG is the ultimate objective of the companies proposing new gas pipelines. The web site of one opposition group, for example, claims there is “new potential for export (of gas) from facilities in Maine and Everett, MA.”

Pipeline foes imply that Massachusetts is a pawn in a bigger game, never mind that consumers here could save, collectively, hundreds of millions of dollars annually through lower bills for electricity if we had a larger, more dependable supply of gas, the fuel of choice now for generating electricity in Massachusetts.

By playing the export card, opponents obviously believe they improve their chances of blocking one or both of the pipelines now on the drawing board in Massachusetts.  If they have to exaggerate the possibility of America actually exporting natural gas one day, no problem.

Here’s what I think has been exaggerated, maybe wildly so:  

The potential to take gas from Pennsylvania, transport it by pipe to industrial complexes on the coasts of Massachusetts or Maine, convert it there to LNG by freezing it to 258 degrees (Fahrenheit) below zero, ship it and sell it overseas for a profit, and do that for the substantial span of years needed to ensure the financial viability of the entire multi-billion-dollar enterprise.

Before saying more, I must disclose that I perform work for pay on behalf of the Coalition to Lower Energy Costs: http://www.energycostcrisis.com/   

I also serve as a director of the Coalition, which advocates for the construction of two new gas pipelines in Massachusetts.  If built, those pipelines could deliver up to an additional 2 billion cubic feet (bcf) of gas per day to the region. 

Persons more knowledgeable (and objective) than I are convinced that 2 bcf more of gas would be enormously beneficial to the economy and to every working person in New England. 

Everyone should be concerned about the high cost of electricity in Massachusetts and how that cost inhibits economic growth, weakens the position of the Commonwealth in national and international marketplaces, undermines our standard of living, and casts a shadow over the futures of our children and grandchildren.  

Now, back to the exaggerations…

When pipeline opponents say there’s new potential for exporting shale-gas-converted-to-LNG from a facility in Everett, they’re apparently referring to the Distrigas terminal on the Mystic River, in the inner part of Boston Harbor, several hundred yards west of the Tobin Bridge. 

Physically, the terminal probably could be adapted to enable LNG exports.  But, local, state and federal authorities would never grant the permits needed to make those changes. 

At least since 9-11, there has been a quiet consensus among our political leaders and public safety professionals that Boston’s inner harbor is not a good place for an LNG terminal. 

LNG will never be exported from Boston Harbor.  Period.

The potential to locate a new LNG export facility measurably increases when you move up the coast to Maine and the maritime provinces of Canada.  Nevertheless, one still has to exaggerate the ease with which a facility could be built there if one wishes to speak confidently about how an LNG export terminal is bound to arise in Maine and/or eastern Canada once those pipelines are built in Massachusetts.

A new LNG export terminal in Maine or Canada could cost upwards of $4 billion to plan, permit and construct. There are serious doubts that any group of investors would finance a project that costly when there are many large (and competing) sources of natural gas in the world beyond North America.

You don’t have to take my word on this, or even listen to what I say.  Listen instead, please, to what the Belfer Center for Science and International Affairs said in a 2014 report, which was published as part of its Geopolitics of Energy Project. [Citation for report: Maugeri, Leonardo. “Falling Short:  A Reality Check for Global LNG Exports” Discussion Paper 2014-11. Belfer Center for Science and International  Affairs, Harvard Kennedy School. December 2014.]  It may be found in its entirety at:

http://belfercenter.ksg.harvard.edu/publication/24870/falling_short.html

Here’s a key excerpt from “Falling Short”:

“As for exporting gas to Europe, several doubts loom large about European capacity to absorb enough natural gas from the United States.  This stems not only from pricing considerations, but also from the sluggish demand for natural gas across Europe, which leaves less room for additional gas to the region, not to mention the attractiveness of higher prices in Asia for US LNG exporters.

“…it is highly probable that, faced with a significant amount of US LNG going to Europe, Russia, Algeria and other big European suppliers of natural gas might start a price war against American gas.

“Consequently, unless one can expect that the European gas price will increase substantially, investors in US LNG export schemes need to be careful about assuming that Europe will be a big market for US natural gas exports.”  [Bold face added]

“Falling Short” cautions that:

“…regardless how optimistic or pessimistic one may be about the continuation of the shale gas revolution, the possibility remains that US shale gas production will not be able to feed growing exports of natural gas, either for environmental reasons (for example, a ban on extending fracking to several areas of the United States), or for having reached the natural limits of shale exploitation at reasonable costs.”