Shale Opportunity Unprecedented

The recent boom in domestic shale gas provides an unprecedented opportunity to the US, even as it is in the final stages of taking a decision on its exports, which will benefit countries like India, a senior American official has said.

"The boom in domestic shale gas provides unprecedented opportunities for the United States,"Christopher Smith, Acting Assistant Secretary of Energy for Fossil told lawmakers yesterday at a Congressional hearing here. "Over the last several years, domestic natural gas production has increased significantly, outpacing consumption growth, resulting in declining natural gas and LNG imports.

"Production growth is primarily due to the development of improved drilling technologies, including the ability to produce natural gas trapped in shale gas geologic formations," he said. Today, domestic natural gas prices are lower than international prices of delivered LNG to overseas markets, Smith said, adding that as in the US, demand for natural gas is growing rapidly in foreign markets. Primarily due to these developments, Department of Energy (DOE) has begun to receive a growing number of applications to export domestically produced natural gas to overseas markets in the form of LNG, he said. Under the current regulations, US can export shale gas to those countries with which it has free trade agreements. There are currently 18 countries with which the US has in place free trade agreements that require 'national treatment for trade in natural gas' for purposes of the Natural Gas Act. They are--Australia, BahrainCanada,Chile, Colombiathe Dominican RepublicEl SalvadorGuatemala,HondurasJordanMexicoMoroccoNicaraguaOman,Panama, PeruRepublic of Korea, and Singapore. There also are two countries - Israel and Costa Rica - that have free trade agreements with the United Statesthat do not require national treatment for trade in natural gas for purposes of the Natural Gas Act.

Smith said to date, Department of Energy has granted one long-term application to export domestically-produced lower-48 LNG to non-FTA countries. That authorisation was issued in Sabine Pass Liquefaction. Testifying before the Congressional Committee,Thomas Y ChoiNational Gas Practice Leader of Deloitte LLP, said US LNG exports are unlikely to cause US prices to rise to levels of importing regions.