Super LNG Market to the World

Yesterday, the federal government approved another exporter to ship “domestically produced liquefied natural gas (LNG) to countries that do not have a free trade agreement (FTA) with the United States.” Golden Pass Products LLC was authorized to sell “up to the equivalent of 2.21 billion cubic feet per day” from its terminal in Jefferson County, Texas.

The nation has just 20 FTAs, so the vast majority of the planet’s LNG customers can be reached only after the U.S. Department of Energy grants permission, once it determines that the transactions will be “consistent with the public interest.”

Bureaucrats have signed off on two dozen such authorizations so far, and many more applications are pending. That’s good news, since the sky’s the limit for the LNG marketplace. Cleaner than coal, and vastly cheaper and more reliable than “green” sources, natural gas is the present, and the future, of efficient and affordable energy. (Earlier this year, even Japan, not much of an enthusiast for buying U.S. goods and services, took delivery of its first tankful of American LNG.)

What does the LNG boom mean for New Mexico? As gas fields closer to export terminals increase their shipments abroad, basins deep in the interior will pick up the slack for domestic consumption. That’s a very, very positive development for the Land of Enchantment. While production of petroleum here has risen, natural gas production has trended downward in the last decade. (See graph below.)

The U.S. will soon be a net exporter of natural gas — something said to be impossible by the “we’re running out of resources” cult not too long ago. New Mexico is well-positioned to benefit from the change. That means better times in the San Juan Basin, where Farmington posts one of the worst unemployment rates in the nation. (At 9 percent, joblessness there ranks #375 out of the 388 metro regions tracked by the U.S. Bureau of Labor Statistics.) Something to smile about in a state that’s grown used to a steady stream of depressing economic/fiscal stats.