In the question and answer session that followed, Smith went on to recognize that the issue is contentious and that the DOE will not hurry the export reviews. According to Politico, Smith said: “We’re moving forward in a way that’s open, transparent and which yields a decision that’s going to withstand the scrutiny it’s going to receive. A decision that doesn’t withstand scrutiny is not going to be useful for the concerns you have and will be the wrong decision for the country.”
The DOE is right to not hurry the export reviews, but hopefully the government sticks with its timelines and acts in a timely manner. We have seen in the Gulf of Mexico how government delay can seriously constrain production. Hopefully the government begins approving export applications and the process is not bogged down by rehearings and court reviews.
The U.S is not the only country trying to take advantage of the disparity between North American prices and the world’s prices. Canada is also seriously considering LNG exports as it recognizes it can make significantly more money selling its natural gas elsewhere. The country already has one facility up and running at Kitmat which is a joint venture between Chevron Corporation (NYSE:CVX) and Apache Corporation (NYSE:APA). While the facility is rather small and currently not connected to a pipeline, work is under way to rectify the situation.
North America has a significant competitive advantage in natural gas compared to the rest of the world. That advantage is not being fully exploited as low prices hamper more production. No matter how the export decisions go, that natural gas needs to be moved from the fields to where it is in demand.
The article Don’t Export More LNG Exports Anytime Soon originally appeared on Fool.com.
Dan Dzombak can be found on Twitter @DanDzombak or on his Facebook page, DanDzombak. He owns shares of Chesapeake Energy. The Motley Fool recommends Chevron. The Motley Fool owns shares of Apache and has the following options: Long Jan 2014 $20 Calls on Chesapeake Energy, Long Jan 2014 $30 Calls on Chesapeake Energy, and Short Jan 2014 $15 Puts on Chesapeake Energy.
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