Thanks to the shale boom, the United States is awash with natural gas, so it’s no surprise that there’s a push to increase our exports of the hydrocarbon. Though barely a decade ago we were busy constructing massive, expensive (in the tens of billions of dollars) facilities to import liquified natural gas (LNG), today companies are constructing LNG export terminals to superchill our glut of shale gas and ship it off to buyers around the globe. Just this past week, Poland purchased a shipment of LNG from a Louisiana facility, marking the first time that American gas was sold to a former Soviet bloc country.
This isn’t just a boon to our allies in Europe, though—it’s an important development for the American economy, and for this country’s natural gas industry (which is more than happy to find new buyers for its product, as domestic prices for natural gas have fallen to historic lows recently). It’s no surprise then that the Trump Administration is making natural gas exports a major theme of its energy policy, as such a policy is consonant with its friendly relationship with the oil and gas industry, and bolstering our exports could create a number of new jobs. Daniel Yergin summed up the case for exporting LNG succinctly for the New York Times:
“Exporting L.N.G. meets many objectives, including helping to address the trade imbalance,” said Daniel Yergin, the energy historian and vice chairman of IHS Markit, a consultancy. “This supports jobs, this supports investment in energy, this supports exports, a whole host of administration objectives.”
There’s a problem here, though: The push to export more American natural gas is clashing with some of the Trump Administration’s other objectives. The White House’s hostility towards the North American Free Trade Agreement (NAFTA) and a general worsening of U.S.-Mexico relations both threaten to put a damper on what has been one of the most promising avenues for selling American natural gas abroad: piping it south to Mexico.
In recent years, Mexico has ratcheted up the amount of gas it imports from the United States as it looks to meet its own growing demand for natural gas while simultaneously weaning itself off of relatively expensive LNG. As a result, we’ve seen rapid growth in the construction of pipeline infrastructure connecting American shale producers with Mexican buyers, as well as an increase in Mexico’s domestic natural gas pipeline network.
This isn’t just helpful to our southern neighbor, but also benefits U.S. producers who are eager to find new markets to which to sell their wares. “It’s a huge potential economic benefit to US producers to be able to ship gas just across the border to Mexico,” said the chairman of the Texas Railroad Commission, David Porter. In other words, this is a win-win situation.
There are clear opportunities for U.S. shale gas to be sold abroad, but a dip in LNG prices is going to make that prospect much more difficult, and tensions with Mexico are threatening our best bet for piping gas to buyers. There’s more work to be done.