COMMENTARY: LNG is a Doomed Industry
Posted: Sunday, April 3, 2016 8:14 am
STEFANIE HERWEK | GUEST COLUMNIST, McAllen Monitor
Skim the business headlines about U.S. liquefied natural gas (LNG) exports, and you’ll see the words “perfect storm” and “bloodbath.” You’ll read about how proposed LNG export terminals are “dying on the vine” and find a list of cancelled and postponed LNG projects all around the world.
It’s a sharp contrast to the rosy economic picture that the LNG industry is painting for the residents of the Rio Grande Valley, where they want to develop an LNG export terminal at the Port of Brownsville.
Citing a 2013 report (when LNG was lucrative), the lobby group Texans for LNG is promising that LNG exports will bring thousands of jobs to the state and billions in tax revenue. The companies proposing to build LNG export terminals to the Port of Brownsville — Texas LNG, Annova LNG and Rio Grande LNG — have paid for studies that claim to show what share of this supposed economic boon they would each bring.
But these predictions are banking on an LNG boom that’s already over.
Global LNG prices have fallen more than 60 percent since 2014 and are expected to fall more in the next three to five years.
This plunge was initiated by plummeting oil prices and made worse because demand for LNG dried up in Asia as the Chinese economy slowed and Japan shifted back to nuclear power. At the same time, the commissioning of several large Australian LNG export facilities created a major glut in the market.
In fact, analyses by the Canadian bank CIBC and the U.S Department of Energy concluded that there will only be a market for 6.5 billion cubic-feet per day of LNG from North America for the next eight years. The five U.S. LNG export terminals already approved and under construction will have a combined maximum capacity of 14 billion cubic-feet per day.
That means the American LNG industry is already on track to produce twice as much as the market will bear for at least the next eight years.
In addition to that huge over-capacity, there are seven LNG export projects ahead of Texas LNG, Annova LNG and Rio Grande LNG in the U.S. regulatory process, and another 20 proposed Canadian projects. This long queue in a limited market makes the companies’ confidence in their business plans sound absurd.
Several export terminal proposals in the United States and Canada have already been withdrawn or delayed. Last month, the Federal Energy Regulatory Commission (FERC), took the unprecedented step of denying approval for the Jordan Cove LNG export terminal in Oregon because the company was unable to line up customers. Without contracts, the company could not show that the public benefit of the project outweighed the significant negative environmental and economic impacts of the export terminal and its 234-mile-long feeder pipeline.
None of the LNG companies eyeing the Port of Brownsville have managed to line up the binding contracts that FERC demanded of Jordan Cove.
But there is already a long list of ways that LNG could negatively affect our coastal environment and economy, including severing the wildlife corridor that is critical for endangered ocelots, creating an industrial eyesore visible from South Padre Island, and keeping shrimpers from their work in the ship channel because of the extensive security zones around the LNG tankers and terminals. It’s a high price for our community to pay for a speculative business that already has such odds stacked against it.
The LNG companies tell us they are looking long term and assure us that the LNG market will be completely different in 2020 when they begin operations. But are we going to take their word for it when reliable analysts say that LNG exports will not be viable until at least 2024?
And what about beyond 2024? Is LNG really a sustainable industry in the long term?
Alarm bells are going off among investors that fossil fuels like methane, with its heavy greenhouse gas emissions, face an uncertain future. In the light of a growing climate emergency, governments around the world are ramping up greenhouse gas regulations, and renewables are increasingly becoming the more preferred and affordable option. This shift toward a post-carbon world has led Britain’s financial services company HBSC to warn that coal, oil and gas companies are an increasingly risky investment due to the potential for stranded assets — product and infrastructure that they may not be able to use.
And the think tank Carbon Tracker said if agreements to cut emissions are reached in order to keep down global temperatures then many of the proposed LNG projects will never be needed. Their carbon footprint is simply too large to be a part of a climate solution.
The LNG companies who want to build refining and export plants in the Port of Brownsville are asking us to bet on a doomed industry, one that could destroy our environment, undermine our existing industries, chain us to a boom-bust cycle, and, in the not too distant future, leave us with rusting, abandoned plants on barren, polluted land.
Let’s keep this market failure out of the Rio Grande Valley. Say no to LNG.
Global LNG prices have fallen more than 60 percent since 2014 and are expected to fall more in the next three to five years.
This plunge was initiated by plummeting oil prices and made worse because demand for LNG dried up in Asia as the Chinese economy slowed and Japan shifted back to nuclear power. At the same time, the commissioning of several large Australian LNG export facilities created a major glut in the market.
In fact, analyses by the Canadian bank CIBC and the U.S Department of Energy concluded that there will only be a market for 6.5 billion cubic-feet per day of LNG from North America for the next eight years. The five U.S. LNG export terminals already approved and under construction will have a combined maximum capacity of 14 billion cubic-feet per day.
That means the American LNG industry is already on track to produce twice as much as the market will bear for at least the next eight years.
In addition to that huge over-capacity, there are seven LNG export projects ahead of Texas LNG, Annova LNG and Rio Grande LNG in the U.S. regulatory process, and another 20 proposed Canadian projects. This long queue in a limited market makes the companies’ confidence in their business plans sound absurd.
Several export terminal proposals in the United States and Canada have already been withdrawn or delayed. Last month, the Federal Energy Regulatory Commission (FERC), took the unprecedented step of denying approval for the Jordan Cove LNG export terminal in Oregon because the company was unable to line up customers. Without contracts, the company could not show that the public benefit of the project outweighed the significant negative environmental and economic impacts of the export terminal and its 234-mile-long feeder pipeline.
None of the LNG companies eyeing the Port of Brownsville have managed to line up the binding contracts that FERC demanded of Jordan Cove.
But there is already a long list of ways that LNG could negatively affect our coastal environment and economy, including severing the wildlife corridor that is critical for endangered ocelots, creating an industrial eyesore visible from South Padre Island, and keeping shrimpers from their work in the ship channel because of the extensive security zones around the LNG tankers and terminals. It’s a high price for our community to pay for a speculative business that already has such odds stacked against it.
The LNG companies tell us they are looking long term and assure us that the LNG market will be completely different in 2020 when they begin operations. But are we going to take their word for it when reliable analysts say that LNG exports will not be viable until at least 2024?
And what about beyond 2024? Is LNG really a sustainable industry in the long term?
Alarm bells are going off among investors that fossil fuels like methane, with its heavy greenhouse gas emissions, face an uncertain future. In the light of a growing climate emergency, governments around the world are ramping up greenhouse gas regulations, and renewables are increasingly becoming the more preferred and affordable option. This shift toward a post-carbon world has led Britain’s financial services company HBSC to warn that coal, oil and gas companies are an increasingly risky investment due to the potential for stranded assets — product and infrastructure that they may not be able to use.
And the think tank Carbon Tracker said if agreements to cut emissions are reached in order to keep down global temperatures then many of the proposed LNG projects will never be needed. Their carbon footprint is simply too large to be a part of a climate solution.
The LNG companies who want to build refining and export plants in the Port of Brownsville are asking us to bet on a doomed industry, one that could destroy our environment, undermine our existing industries, chain us to a boom-bust cycle, and, in the not too distant future, leave us with rusting, abandoned plants on barren, polluted land.
Let’s keep this market failure out of the Rio Grande Valley. Say no to LNG.
Yes to jobs. Yes to LNG.
ReplyDeleteFCk LnG! Yes to clean air and natural environment. Bola de pendejos! Read the damn article. "Hey if we give you jobs can we F*CK up your environment down here? Sure. I'm Stupid and cant think about the future generations air, land and water.
ReplyDeleteYou can offer local Mexicans jobs, but you can't make them work.
DeleteThis town is full of pussies. LNG threatens no one. Pleasanton has an Ergon plant downtown!!! Morons. Get to work, moochers.
ReplyDeleteWhy did the chickenshit Brownsville Herald not run this McAllen Monitor story? After all, the proposed LNG plants are in Cameron, no Hidalgo County. Although the Herald typically uses the Monitor stories as fill, they rejected this story since it might be upsetting to the the big LNG companies.
ReplyDeleteThe Herald does what the herald is told by the city and county head honchos, that's why they didn't run this article.
ReplyDeleteThe Herald is a pussy... cat
ReplyDelete