Just off the coast of Louisiana right now, the Energy Atlantic is waiting to collect a historic cargo: the first exports from America’s shale gas revolution.
And as Bloomberg reports, ready to steer the giant tanker into Cheniere Energy Inc.’s $15 billion Sabine Pass terminal is a fleet of tugboats that has spent the past seven years killing time—some days holding emergency exercises, some days racing each other. They were all set to escort shipments of natural-gas imports, but the ships never arrived. Unexpectedly, the U.S. started producing enough gas of its own.
“The boats are beautiful—you could eat off the floor in the engine room,” says Richard Ennis, head of natural resources at ING Capital. With the switch to exports, the tugs will at last have a job to do—even if it’s not the one they expected. They “may actually get a scratch on them,” Ennis says.
The surge in oil and gas output from U.S. shale drillers has the potential to transform world markets. At home, it has left a chain of idle import facilities from the Northeast to the Gulf Coast, as energy companies pile onto the export bandwagon instead: $50 billion-worth of terminals are due to come online in the next five years.
But if the importers were blindsided by shale, exporters now confront a glut in world markets and slowing demand in Asia that’s making some investors cautious. Cheniere’s CEO was ousted last month as shareholders rebelled against his plans to bet even more heavily on exports.
Cheniere has been able to avoid taking a financial hit on its idle import facilities because customers reserve space there even though they don’t use it. Total SA and Chevron Corp. are contracted to pay about $5 billion over 20 years to keep the tugboats, including a crew of five to seven members each, and the Sabine Pass import terminal in prime shape.
For that, each energy giant gets to reserve 1 billion cubic feet a day of regasification capacity—the ability to convert shipments of imported LNG into gas that could be piped around the U.S., if it was needed.
But it isn’t. Nationwide, such plants are operating at less than 1% of capacity. The U.S. is now producing 80 billion cubic feet a day of its own gas, and says it’s on course to become a net exporter next year.
