By Lori LeBlanc, LMOGA Offshore Committee Director for BIC Magazine
One evening in 1870, an unsuspecting night watchman at an ice plant in Shreveport, Louisiana, struck a match and accidentally discovered natural gas emanating from a well drilled in search of artesian water. Gas from that well was eventually piped to the ice plant to provide light, and Louisiana’s history as a natural gas production leader began. Today, natural gas heats the vast majority of homes and businesses in our state and around the country, and is also a critical feedstock for Louisiana’s prosperous chemical manufacturing industry.
Natural gas production here has traditionally been focused on inshore gas plays, such as the Monroe Gas Fields and Haynesville Gas Field in north Louisiana, but the Gulf of Mexico has emerged as a steady source for natural gas. According to the U.S. Energy Information Administration (EIA), offshore natural gas production in the Gulf accounts for 5 percent of total U.S. dry production, and 51 percent of total U.S. natural gas processing plant capacity is located along the Gulf Coast. The introduction of liquefied natural gas (LNG) production and exports promises to strengthen the role of offshore operations in our nation’s natural gas industry.
LNG is an odorless, colorless, nontoxic, noncorrosive and nonflammable form of methane that is more economical and safer to store and ship long distances in tankers than “dry” natural gas. LNG is now considered a global commodity and demand is growing, according to the International Gas Union, particularly in Asia-Pacific countries, which import over 70 percent of the total LNG imported around the world.
The EIA’s Energy Outlook 2017 notes natural gas production in the U.S. is expected to grow rapidly — about 4 percent annually — from 2016-2020, and LNG is projected to dominate U.S. natural gas exports by the early 2020s. Natural gas trade, which has historically been focused on pipelines from Canada to Mexico, is projected to be increasingly dominated by LNG exports to more distant destinations around the world. The industry has taken notice of these trends, and it all spells greater economic activity and jobs along Louisiana’s energy coast.
On Feb. 24, 2016, at a new LNG terminal constructed in Sabine Pass, Louisiana, Cheniere Energy Partners loaded its first commissioned LNG cargo onto a tanker headed to Brazil. This was a truly historic event, marking the first export of LNG produced not only in Louisiana but also in the U.S. Since then, additional LNG production and export facilities have been announced for construction along our coast in the southwest corner of the state, including G2 LNG’s facility on the Calcasieu River Ship Channel and Venture Global’s facility at Calcasieu Pass.
In January, a major announcement was made that would expand LNG activity to southeastern Louisiana, at a major hub of energy production in the Gulf. Energy World USA and the Greater Lafourche Port Commission (GLPC) have proposed an $800 million LNG production and export facility at Port Fourchon, representing the largest single initial investment in the history of Port Fourchon and Lafourche Parish.
The Energy World USA plant will produce up to two million tons of LNG per year for export and will also fuel the next generation of offshore supply vessels powered by LNG for operating in the Gulf of Mexico. Though it is very early in the planning and regulatory process, GLPC Executive Director Chett Chiasson said the port is “excited to be able to tell the community and our tenants about this potential opportunity to continue to keep Port Fourchon at the very cutting edge of the oil and gas services industry.” He also noted the LNG facility “greatly enhances our capability and versatility as the premier services hub for the oil and gas industry.”
Louisiana has come a long way in natural gas production since that watchman lit a match at the Shreveport ice plant in 1870. LMOGA is proud of our state’s role in producing natural gas for American families for over a century, and we applaud our state and industry for emerging as a leader in LNG production, which has a very promising future along our valuable energy coast.