“Like any job, there’s going to be some downtime,” Keraga said.
In this case, a lot of downtime. Dominion Resources’ Cove Point terminal, originally designed in the 1970s, can import liquefied natural gas — or LNG — from up to 220 tankers a year. But this year only one tanker has unloaded here, back in May.
That’s because the international trade in natural gas — and the rest of the energy business — has been turned upside down. It’s as startling as it would be if rivers decided to run upstream.
As recently as four years ago, energy experts agreed that the United States would need to import LNG to fill the gap between rising U.S. consumption of natural gas and stagnant or diminishing domestic supplies.
But U.S. supplies didn’t diminish or stagnate. Instead, oil and gas companies figured out how to combine horizontal drilling and hydraulic fracturing techniques to tap vast gas reserves trapped in layers of shale rock. And thanks to the surge in shale gas from deposits in places that include Pennsylvania, Texas and Louisiana, the United States is awash with cheap natural gas and could soon turn into a net exporter rather than a net importer.
Now Dominion Resources wants to reverse course. It is seeking permission from federal regulators to build $2 billion of new facilities so that it can export — rather than import — natural gas. Instead of taking liquid from tankers and warming it into natural gas for U.S. consumers, the company would cool and liquefy U.S. natural gas for shipment and sale abroad.
“There has been such a transformation,” said Sen. Ron Wyden (D-Ore.), the likely next chairman of the Senate Energy and Natural Resources Committee. “In my home state, until recently we were having pitched battles over whether to construct import facilities. Fishing folks against environmental folks against landowners. High-decibel stuff. And virtually overnight, we’re not going to have import facilities but export facilities.”
As U.S. supplies have surged, U.S. prices have slumped. Suddenly, producing companies are looking for ways to sell gas abroad, where prices are three to five times as high. And customers are lining up. Japan’s Sumitomo and another Asian buyer have signed long-term agreements to buy LNG from Cove Point; those contracts include guarantees that enable Dominion to line up financing. In Japan, gas prices have run as high as $16 for a thousand cubic feet; in the United States, prices are currently about $3.70. Even after adjusting for the costs of liquefaction and shipping, it’s a good deal for customers like Japan.
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