President Obama Supports Natural Gas Exports

Earlier this month, President Obama said the U.S. will probably become a net exporter of natural gas by the close of this decade, hinting that his administration will support additional liquefied natural gas export projects from the United States.  

That prospect now looks more likely, as the administration on Friday cleared the way for the Freeport LNG project -- a $10 billion facility on Quintana Island, Texas and partly owned by ConocoPhillips (NYSE: COP  ) , Dow Chemical (NYSE: DOW  ) , and Osaka Gas -- to export gas to countries that don't have a free-trade agreement with the United States. That makes it only the second such project to receive the Department of Energy's stamp of approval.

The first was Cheniere Energy's (NYSEMKT: LNG  ) Sabine Pass terminal in Louisiana, which was given the green light back in 2011. In total, the DOE has received more than two dozen applications for permits to export LNG to non-free-trade nations -- a group that includes China, India, Japan, and members of the European Union.

In deciding whether to approve additional projects, the DOE conceded that it would take into account "market developments" at the end of the year, most likely referring to a potential rise in U.S. gas prices as a result of more ventures being approved. The department said it will assess the remaining applications in the order they were received.  

LNG opponents and advocates
With U.S. natural gas production still hovering near record highs, the Obama administration is reconsidering how the domestic glut of shale gas can provide the U.S. with greater energy security and diplomatic leverage. Freeport's approval suggests that the administration views natural gas exports as a net positive to the U.S. economy and may be likely to approve more projects in the months and years ahead.

But not everybody shares that view. Dow Chemical (NYSE: DOW  ) and Alcoa (NYSE: AA  ) , both of which have energy-intensive operations and have benefited from cheap domestic gas, are two companies actively urging the Obama administration to reject further LNG exports, which, they argue, would lead to higher gas prices, eroding their new-found competitive advantage.  

On the other hand, federal officials find it hard to justify rejecting LNG exports, on the grounds that it would send a contradicting message to other nations about U.S. support for free trade, according to the Financial Times.

U.S. natural gas producers, many of which have languished over the past few years because of depressed gas prices, are also pushing for more LNG export projects to be approved because it would provide them with new and lucrative foreign outlets for their product. For instance, exporting gas to Japan -- where the fuel costs four times as much as it does in the U.S. -- stands out as one of the most profitable opportunities for U.S. companies.

Other major U.S. corporations have also voiced their support for LNG exports. For instance, General Electric (NYSE: GE  ) Vice Chairman John Rice has said that, though the company would benefit from cheap domestic natural gas, it backs gas exports because "in the long run we think it's in our interest and every other competitive company on a global scale to have a level playing field."

What do you think? Are natural gas export projects in the nation's best interest? Or should we keep our abundant gas resources to ourselves?

If more LNG export projects are approved, as looks likely, many believe that domestic natural gas prices could rise sharply. As the nation's second-largest natural gas producer, Chesapeake Energy would be a major beneficiary of higher gas prices. While debt-related challenges continue to cast a dark cloud of uncertainty over the company's future, few would question the superb quality of Chesapeake's remaining oil and gas assets. For many investors, the important question is whether Chesapeake's current share price reflects the true value of its assets. To answer that question and to learn more about Chesapeake and its enormous potential, you're invited to check out The Motley Fool's brand-new premium report on the company. Simply click here now to access your copy, and as an added bonus, you'll receive a full year of key updates and expert guidance as news continues to develop.

Read/Post Comments (12) | Recommend This Article (10)

Comments from our Foolish Readers

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  • Report this Comment On May 18, 2013, at 11:31 AM, cdkeli wrote:

    I support natural gas exports too so why don't we stick tubes down the congressional repubicans and make cash off their voluminous gaseous expellations??

  • Report this Comment On May 18, 2013, at 11:31 AM, automaticsteam wrote:

    President Obama Supports Natural Gas Exports...

    because his Commie and other anti-American Masters demand it...!

  • Report this Comment On May 18, 2013, at 11:45 AM, spudak wrote:

    This is bad, very bad, The gas Price will go up the economy will get worse. This is Americas oil and we do pay a price for it, you pay a price. Obama told us over and over this was to lower price then he turns around and does this. What a back stabbing traitor.

  • Report this Comment On May 18, 2013, at 1:30 PM, medguy1 wrote:

    Can we PLEASE, now, put an end to the "Energy independence" Lie?

  • Report this Comment On May 18, 2013, at 3:14 PM, awolfbeme wrote:

    our goverment really likes sticking it to us.that is OUR gas and OIL none of the oil or gas in this country should ever be exported EVER! the oil companies kep the price high and make a mint.mean while our goverment gets chump change for it.wake up people both parties are the scum of the earth.

  • Report this Comment On May 18, 2013, at 3:27 PM, btc909 wrote:

    Hummm that Civic CNG, filling station is under 4 miles away from me, eh forget it, I can see the prices skyrocketing in the next few years. Also get rid of your love of gas stoves unless you want to pay up the nose to use one.

  • Report this Comment On May 18, 2013, at 4:05 PM, crumpetsntea wrote:

    Why are we exporting all of our oil and gas?

    If we just kept it to ourselves, we would have cheap gas, and cheap energy. This doesn't just affect prices at the pump, or the prices of your electricity bill. It affects food prices as well.

    I just don't understand why the government is so stupid.

  • Report this Comment On May 18, 2013, at 4:32 PM, clloyd53 wrote:

    Strange how one can vehemently oppose a oil pipeline that will reduce imports from our Arab enemies. While supporting new gas pipelines for export. Especially when the president opposes new gas pipelines to connect more homes in the US. And save Americans money and reduce pollution.

  • Report this Comment On May 18, 2013, at 4:34 PM, ted026 wrote:

    Hard to believe it Mr. Obama but every time I think you have done as bad as you can, you top yourself again. Why would you ever want to get rid of a precious resource like natural gas. That can be used almost like gas DUH. Stop giving our men our money and now our natural resources away. Is it your intention to ruin this country completely.

  • Report this Comment On May 18, 2013, at 4:56 PM, solopysky wrote:

    It's not complicated. Profits, not the US citizens needs. Profits for the oil barons. Just as it always is. The pipeline from Canada was not ease US prices, but for export to increase profits.

  • Report this Comment On May 18, 2013, at 7:47 PM, zukerman wrote:

    Once again, we have the ramblings from those that know nothing about resources, their exports or the economy. Oil companies would naturally be the ones that owned the gas reserves in this country. The only way to control the prices of fuel would be to nationalize all oil companies like Venezuela did. You idiots cry socialism when the government does anything and now you expect the US to hoard their resources? We don't have the refining capacity to refine enough gas in the US for our own use, so you'll have to still import just to get by. Once YOU hoard so will the other countries and the prices skyrocket. This is the dilemma we face. Once again you are guilty of believing the Boon Pickens of the world that told you LNG would lower the price of fuel. Oh, and before you say build more refineries, it takes ten years of permitting, licensing and construction for completion. Plus the oil companies don't have any reason to build more refineries because more supply means less per gallon. Savvy?

  • Report this Comment On May 18, 2013, at 8:05 PM, zukerman wrote:

    solopysky, you are correct. The pipeline proponents tried to tell the people they wanted this built to lower their prices, but Obama knew differently. The excess oil caused a glut of oil from the Dakotas, which lowered prices on the east coast for quite some time. Recently the oil companies have started to use existing lines used for other liquids to fill their tankers for shipment to other countries, and where are prices again? The west coast doesn't have half the refining capacity that the east coast does and that's why their prices are always higher. It's proving to be true that our educational system is failing, when we fail to educate people with the basic understanding on how and economy works. This is truly the lost generation.

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