Asian nations eagerly eye cheap US natural gas

Price dominated morning discussion Wednesday at the LNG 17 conference in Houston, as interest in U.S. natural gas continues to soar worldwide.

The buzz around price started when Daniel Yergin, the Pulitzer Prize-winning author and renowned expert on the energy industry, projected U.S. gas could reach Asian markets at a price of $12 per million British thermal units.

Natural gas produced in the United States currently is selling at about $4 per million British thermal units. But moving, liquefying and shipping the resource to customers abroad, along with expected short-term price growth, will likely create a $12 price in Asia, Yergin said.

That price would still leave U.S. liquefied natural gas much cheaper than LNG currently being bought by Japan at around $16 per million British thermal units.

“That will be a price threshold that will be very significant for the industry,” Yergin said.

The prediction raised questions for Asian buyers, who have been increasingly intent on securing supplies of natural gas for the long term. And representatives from Asian companies have made up a large contingent at the 17th International Conference & Exhibition on Liquefied Natural Gas being held at the George R. Brown Convention Center.

Live: Coverage from the LNG 17 conference

Tokyo Gas Executive Vice President Shigeru Muraki faced several questions related to price during a panel on global gas demand.

He speculated that even if natural gas prices rise in the United States, the resource will still be attractive to Asian buyers.

“We anticipate that gas from the U.S. will be coming to East Asian market between $10 to $12, but it will be higher if the Henry Hub price goes to $6 or $7 per million Btu and if the oil price goes down to $70 to $80 per barrel,” Muraki said, referring to natural gas futures traded in the United States. “So the price of LNG from the U.S. and traditional LNG in Asia becomes equivalent or maybe oil indexes becomes cheaper. However that is affordable price or affordable conditions for the market.”

Booming U.S. natural gas production in recent years has led to a surplus of the resource and bargain prices for electricity companies and other users. Producers are pushing the government to approve permits for facilities that plan to export natural gas to countries with which the United States does not have free trade agreements.

So far, just one facility has been approved for natural gas exports to all countries: Sabine Pass in Louisiana, which is owned by Houston-based Cheniere Energy Partners.

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