Increased liquefied natural gas (LNG) exports could have some impact on the US natural gas price, but it may not be as high as the chemical industry fears, the chief economist for the American Petroleum Institute said in Houston Wednesday.
Speaking to Houston-based website Fuelfix, John Felmy said he believes the chemical industry is wrong to be too concerned over the LNG exports from the United States boosting the price of gas it buys, as industry data show there could be a bigger US natural gas supply than meets the eye.
Felmy said there will likely be an increase in the price of natural gas in the short term after LNG exports hit the global market, but increased gas production could fuel a response to rising international demand and keep prices relatively low in the long run.
He said selling LNG to international buyers would stoke natural gas drilling activity back up in the United States.
Big international buyers such as China and Japan are expected to fuel demand for natural gas for several years, and exporters could send LNG tankers there for much lower shipping costs once the Panama Canal is widened in coming years, Felmy added.
The Panama Canal expansion project, scheduled to be completed in 2015, will double the capacity of the canal and facilitate trade and transportation between the resource-rich southern US states and Asian countries.
The US Department of Energy has so far approved four LNG export projects along the Gulf of Mexico, and 16 more are waiting in the wings for approval. The total amount of LNG capacity in the projects approaches half of all US production.
