The Other End of the Pipeline

LNG companies are using a funny kind of math when they count jobs to be created by their industry along the Lagune Madre.

In proposals to public entities, LNG companies are taking credit for jobs that will actually be created with taxpayer dollars. Gulf Coast LNG, in its submission to the Port of Brownsville, for example, claims it will create 3,000 construction and engineering jobs. That total most likely includes jobs involved in building a pipeline from the King Ranch to the Brownsville port — a project to be paid for by the Brownsville Public Utilities Board, not Gulf Coast LNG.

Gulf Coast also says it will create 250 permanent jobs in Brownsville, many of them high-paying posts for engineers and other professionals. Problem is, few of those slots are expected to go to people from the Brownsville area.

“It would be helpful to know what the permanent jobs will be in terms of skills and salary. Are these LNG companies prepared to pay a living wage to all employees? Are they planning to work with local colleges, community colleges, and high schools to develop skills programs to feed the job openings?” asked Bill Berg. The former engineering department chairman of the University of Texas-Brownsville is part of a South Texas group that’s trying to raise awareness about issues that surround LNG.

So far, Gulf Coast LNG and other companies planning on setting up shop in Brownsville haven’t provided such details.

Whatever the jobs are, the reality is that most of them won’t last more than about 15 years. That’s about when the foreign market for LNG is expected to collapse, according to projections from the U.S. Department of Energy. If they last longer, that would likely be because the U.S. by then would have exhausted its shale gas reserves and would then be using export terminals as sites to import LNG from other countries.

Not many regions in the world have been able — or willing — to use fracking to unlock shale gas reserves the way this country has. Foreign frackers aren’t far behind, but experts predict it could take those countries 10 to 15 years to catch up. And that’s the window of opportunity that U.S. companies are hoping to exploit with LNG development. To do so, they need legislative help that Congress seems ready to deliver.

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Exporting LNG requires a federal permit. In practice, it’s far easier for a company to get that permit if it plans to ship its product to countries that are designated as trade allies of the United States.

However, most of those countries are already fracturing, meaning that most are not interested in buying much shale gas. The major markets for LNG, therefore, are the non-trade allies, with China being by far the biggest potential customer.

To help multinational, multi-billion-dollar corporations take advantage of that market — and suck out America’s natural gas reserve more quickly — the U.S. House passed several bills this summer. Among them is the North American Energy Infrastructure Act, which would eliminate the permits now required to transfer natural gas and other energy commodities to foreign countries via pipeline. Another bill, HR 636, would expand the list of countries that LNG exporters could automatically sell to. Instead of just the 20 countries that have free-trade agreements with the U.S., companies could ship LNG to all 160 members — including China — of the World Trade Organization.

In the House, the bills generally enjoyed the support of Texas Democrats, breaking with a broader party caucus that opposes the fast-tracking of oil and natural gas exports. Most notable has been Rep. Filemon Vela of Brownsville, who is actively promoting LNG development. He’s one of four Texas Democrats who voted last year for a bill that would have enabled the Keystone pipeline to be built across the U.S.-Canada border without getting presidential permission. And he voted yes to the fast-tracking of LNG.

Both bills are considered to have a fair chance of passing the Senate. If they do, the longevity of the United States’ natural gas reserves could be significantly shortened, while the prices of natural gas to U.S. customers would rise. According to projections from the U.S. Energy Information Association, prices could go up by as much as 40 percent in the next two years if LNG exports keep growing.

Currently, natural gas costs about $4 per million British thermal units in the United States. In China and other Asian markets, it’s $16 per MBTU.

China and Russia have huge shale formations but very weak infrastructure. The time needed to get those pipeline systems built, to move gas around in their domestic markets, is the reason for the 15-year window for LNG exports.

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