The biggest indicator of this is what has been seen recently with public and private investment in the region in resources that will continue to drive this new economic machine.
Matt Barr, with Cheniere Energy, spoke about the potential economic impact of Liquid Natural Gas (LNG) exports, which are only now in the very early phases of development.
“Cheniere was actually in the business of LNG imports in the early 2000s,” Barr said. “Which, at this point, is kind of the punchline in my presentation – to think that we were talking about importing natural gas because that was going to be one of the biggest threats to the U.S. Economy according to the federal reserve chairman at the time.”
LNG, Barr explained, is the same natural gas that comes into homes for use as a fuel for furnaces, hot water heaters and stoves, but is then liquified through refrigeration down to -260 degrees Farenheit.
“This reduces its volume by 600 times,” Barr said. “That is what makes it economical to ship overseas.”
A common misconception related to LNG is about its safety, he said.
“Liquified natural gas in its liquid state is not combustible,” Barr said. “It will not explode. As the LNG vaporizes it turns into pure methane, so it is flammable – it will burn, but it is not combustible. It will not explode.”
Barr explained that LNG has been around for more than 40 years, but until recently has been an import.
Global demand for LNG is growing, Barr said, and new export facilities are rapidly being built to meet the growing demand.
“The demand is there globally, from Asia, from Europe,” Barr said. “Looking at these numbers, basically amounts to the fact that one LNG export facility per year will need to be built to keep up with this demand.”
The U.S. is not the only player in the LNG export game, however.
“That is one of the key factors with LNG exports in the debate right now,” Barr said. “We have a very finite window in the U.S. Canada has 11 proposed LNG export facilities on the books. Australia is building several LNG export facilities. So when it comes to LNG export competition, it is not between the companies here in the U.S. – because the supply is there – it is between the U.S. and Canada, the U.S. and Australia, the U.S. And the other countries that are developing those export facilities.”
LNG exports are expected to have a significant impact on south Texas in the near future, Barr emphasized.
“We are going to be at the center of the LNG exports revolution,” he said, noting that two facilities in the area will bring even more jobs and economic activity to the region.
Ongoing construction at the facilities in the Corpus Christi are alone, will represent an $11 billion investment, there will be an estimated 50,000 construction jobs, and close to 50,000 additional long term jobs related to the new industry.
The economic impact to south Texas is estimated at $730 million per year, according to a recent study.
The permitting process is continuing, Barr explained, but groundbreaking could happen as soon as 2015, and exports from the facilities may begin to leave Texas ports as soon as 2018.
Frank Brogan, managing director for the Port of Corpus Christi Authority, said that when the development of the Eagle Ford Shale first began to kick in, it was looked upon as a “negative” by the port.
This, he said, is because the import activity at the port began to drop off dramatically, because of the increase of domestic oil and gas production within the region.
Over time, however, exports began to increase, counterbalancing the loss in import activity.
The Port of Corpus Christi is the fifth largest port in the U.S., Brogan explained.
“A lot of people don’t realize just how large we are,” he said. “We are approaching 90 million tons this past year, and my forecast is that in five years we will probably be handling 120 million tons per year.”
Brogan described the “band” of light, visible from space associated with all the activity in the Eagle Ford Shale and said there are indicators now that a parallel “band” of development within the dry gas window of the shale located to the southeast is beginning to develop.
“When we talk about the opportunities with natural gas, I am reminded continually that there is another band of development in the making right below that in the dry side of the Eagle Ford. We can see in the future as natural gas prices increase enough to justify exploration we can see a parallel band going across there.”
“This is a long term play,” Brogan said, describing the Eagle Ford Shale.
“For the first time in 50 years, our port became an export port instead of an import port,” he said. “The exports are just taking off. Now we are struggling with how we can keep up with that growth.”
Brogan discussed numerous dock improvements that are under construction in the area and plans for a new harbor bridge with a higher clearance of 205 feet, allowing for the passage of larger cargo ships. Many developments are now in the works totaling more than $22 billion in investment, as well as numerous spin-off developments related to the energy industry.
“It is absolutely amazing,” Brogan said. “I have been a resident of Corpus Christi for over 40 years and I actually grew up here in San Antonio.”
“I have never seen anything like it. This is an epic time for our port and our community.”