USA sends shale gas and oil to Europe for the first time

LNG carrier tanker
Author: Wolfgang Meinhart, Hamburg, GNU Licence, Wikipedia

Historically, European gas markets have been dominated by Norwegian and Russian suppliers, but that is likely to change with the first cargo of American shale gas reaching its shores shortly.

According to reports, Creole Spirit, the sixth cargo from Cheniere Energy Inc.’s Sabine Pass facility, left the terminal on April 15th heading for Portugal. It is believed that the cargo was bought by Galp Energia SGPS SA, Portugal’s biggest oil company.

U.S. LNG will help contribute to an 18 percent increase in global LNG capacity through 2017, according to Bank of America Merrill Lynch, with Europe being the third continent to receive U.S. shale gas.

“LNG coming out of the U.S. is probably the single most important thing that will transform the future LNG market,” Melissa Stark, energy managing director and global LNG lead at Accenture, told Bloomberg by e-mail. “It heralds the arrival of a global market.”

According to a Wall Street Journal report, Deutsch Bank estimates that the United Stated could become Europe’s biggest natural gas supplier within a decade, displacing Russia from the top spot.

As Bloomberg reported, gas futures have climbed 7 percent over the past month as the shipments limit the size of the biggest seasonal supply glut in four years. This is a very welcome development for a country awash with gas and for the first time since 2014, hedge funds are betting on rising gas prices. Natural gas futures have rebounded 26 percent since dropping to $1.611 per million British thermal units early last month, the lowest intraday price since August 1998. Gas for May delivery rose 5 percent to $2.037 at 12:24 p.m. on the New York Mercantile Exchange.

“There are actually molecules being taken out of the system; that’s supportive,” said Kyle Cooper, director of research with IAF Advisors and Cypress Energy Capital Management in Houston. “Had Cheniere not been able to begin, it would have been a bearish factor for sure.”

Meanwhile, Hess Corporation made history when it confirmed that it has shipped 175,000 barrels of Bakken crude to Rotterdam in The Netherlands, the first North Dakota oil sent overseas since the lifting of the U.S. crude export ban last December.

“As far as we know, it would be the first Bakken crude to be shipped abroad,” said Tessa Sandstrom, North Dakota Petroleum Council communications manager. “It’s a huge step forward for the state and for the nation in terms of energy security and being a provider of energy for our allies.”

Speaking to The Bakken Magazine, Sandstrom noted that Hess and other Bakken producers—including Continental Resources and ConocoPhillips—had strongly advocated for lifting the ban on U.S. crude exports that had been in effect since the 1970s.

“Having more markets for our crude gives us a better chance of bolstering our production and increasing domestic production, which goes back to creating more jobs and growing our economy while keeping prices at the pump low for consumers,” she said.

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