Breaking: First Marcellus Fracked Gas Export Permit Approved by Energy Dept

Wed, 2013-09-11 12:45Steve Horn
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Breaking: First Marcellus Fracked Gas Export Permit Approved by Energy Dept

The U.S. Department of Energy (DOE) has granted the first ever LNG export permit license to Dominion Resources, Inc. to export gas obtained from the controversial hydraulic fracturing (“fracking”) process in the Marcellus Shale basin.  

It's the fourth ever export terminal approved by the DOE, with the three others along the Gulf Coast: Cheniere's Sabine Pass LNG, Freeport LNG (50-percent owned by ConocoPhillips) and Lake Charles Exports, LLC

Located in Lusby, Maryland, the Dominion Cove Point LNG terminal will be a key regional hub to take gas fracked from one of the most prolific shale basins in the world - the Marcellus - and ship it to global markets, with shale gas exports a key geopolitical bargaining chip with Russia, the biggest producer of conventional gas in the world.

Dominion owns not only Cove Point, but also the pipeline infrastructure set to feed the terminal.

“Dominion…owns both the existing Cove Point LNG Terminal and the 88-mile Cove Point pipeline,” explained industry publication LNG Global. “Dominion Cove Point…stated in their application that natural gas will be delivered to the Cove Point Pipeline from the interstate pipeline grid, thereby allowing gas to be sourced broadly.”

DOE handed Dominion a permit lasting a generation.  

“Subject to environmental review and final regulatory approval, the facility is conditionally authorized to export at a rate of up to 0.77 billion cubic feet of natural gas a day (Bcf/d) for a period of 20 years,” LNG Global further explained.

It's a decision that is set to affect the course of U.S. energy markets, the global climate system and sensitive ecosystems for decades to come. 

With the DOE authorizing Dominion to export gas from Cove Point, Maryland, “it is deeply disappointing to see that Secretary [Ernest] Moniz persists in leading the nation and the world into a dirty energy future. It's a bad deal all around: for public health, the environment, and America's working people,” the Sierra Club said in a statement.

“Exporting LNG to foreign buyers will lock us into decades-long contracts, which in turn will lead to more drilling – and that means more fracking, more air and water pollution, and more climate-fueled weather disasters like record fires, droughts, and superstorms like last year's Sandy…As we have shown, once environmental impacts are evaluated, it becomes clear that the additional fracking and gas production exports would induce is unacceptable.”

“Dominion” means “the act or fact of ruling” and today in the Marcellus it equates to the “golden rule”: he who has the gold makes the rules, in which Marcellus fracked gas will soon flow to the highest bidder on the global market.

Photo Credit: ShutterStock | pinthong nakon

Comments

Let me see here. The latest figure for proven reserves throughout Appalachia (Marcellus) is 31 trillion cubic feet. http://www.eia.gov/naturalgas/crudeoilreserves/

Appalachia states (New York, New Jersey, Maryland, Pennsylvania, Virginia, Delaware, West Virginia, North Carolina) consume as of 2011 3,833 billion cubic feet of gas per year or 3.8 trillion cubic feet. The US consumes 24.4 trillion cubic feet.

http://www.eia.gov/dnav/ng/ng_cons_sum_dcu_nus_a.htm

So we want to ship 0.77 billion cubic feet per day or 280 billion cubic feet per year of gas overseas? That alone could gas up Maryland and Delaware for the year. Why are we sending natural gas overseas other than to trade on the world market to make a few commodity traders really rich and to keep the price up for O&G to keep drilling? Hell New York is building the Ambrose LNG plant to receive gas from someone somewhere. So LNG will go in and out.

Put it this way, if the Marcellus was only to supply state's sitting over the formation there'd only be about 8 years of gas (31 trillion in proven reserves / 3.8 consumed per year).

Thanks Steve and great work.

Its about oil companies wanting to make more money.  If they can export or import, then natural gas will settle out to a global (higher than now) price.

However, this makes zero sense.  The US is always complaining about dependance on foreign oil.  Now that they have a local energy source, they are selling it?  That makes no sense to me.  That will simply increase local energy prices, and deplete American energy reserves.

In interesting factoid… 8-10% of the natural gas is burned to compress it.

 

(On the plus side LNG Export will raise prices which will make Solar\Wind more competitive.)

Is the 8 to 10 percent for compression just to move gas along in pipes or is it the energy associated with liquefying/expanding it? Add loses due to flaring, fugitive emissions, processing, storage (usually in porous subsurface formations) and we're talking a lot of gas is needed to produce a lesser bunch of gas. Add shipping tankers burning bunker C or whatever they burn and we're back to coal equivalent in CO2 emissions. If O&G companies don't have a seat on the trading floor (computer terminal), they better get one. That's where the money will be made. Assuming they don't do an Enron.

Here's an intesting factoid. Ship engines burning heavy fuel are pretty darn efficient so it almost does't make much sense to convert to natural gas. But that will become a selling point one of these days.

I've already piqued Steve's curiosity about it. Dang if I can't find a single reasonable source of this.

There are a lot of losses in transportation. (I heard 3% was typical.)

http://en.wikipedia.org/wiki/LNG_carrier

Maybe Steve can remember that link I found.

Michael here's what I orignally found;

Liquefaction plants are typically the most expensive element in an LNG project. Because 8%–10% of gas delivered to the plant is used to fuel the refrigeration process, overall operating costs are high even though other costs, such as labor and maintenance, are low.

http://www.natgas.info/html/liquefiednaturalgaschain.html

 

This kind of data is private, and embedded in each port's operating model, so findign it is hard.  The reality is that a considerable amount of energy must be used and\or lost with the LNG process.  The only question is how much.

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Behind nearly every major corporate policy push there's an accompanying well-coordinated public relations and propaganda campaign. As it turns out, the oil and gas industry's push to export liquefied natural gas (LNG) obtained via ...

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