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North American LNG Export Initiatives: The Difficulties, Pace & Expenses Involved

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HOUSTON, September 15, 2014 -- In a recent Oil & Gas Financial Journal article, Baker Botts Global Projects lawyers Kevin Keenan and Lindsey Blankenau discuss some of the challenges and opportunities faced by U.S. and Canadian natural gas exporters in light of the difficulties, the pace and the expense of this massive retooling effort.

When discussing the difficulties of this infrastructure overhaul, the authors noted, “Shale gas production has opened a vigorous public policy debate in the U.S., while exporting U.S. natural gas could provide many benefits, including tipping the balance of payments slightly back in its favor by decreasing its negative trade deficit, industrial users of natural gas are concerned that the benefits will be outweighed by increased domestic natural gas prices.”

They also stated, “The enormous production shift in the United States alongside new Canadian shale gas production can only exacerbate the potential surplus situation in Canada by adding new production to the significant level of existing production that is rapidly losing market share south of the border” when analyzing difficulties on the Canadian side.

The authors also provided their view on the likely results, stating that, “One answer is that these terminals may be exporting their capacity to overseas markets at a cost advantage to international competitors.”

“Change is never easy and the road to success for many of the projects in North America is fraught with difficulty as rising construction costs, access to capital, policy concerns, environmental opposition, rising labor costs, burdensome regulation, aboriginal opposition and even geopolitical events can, in the aggregate and in some cases individually, sink an otherwise healthy and viable project.”

To view the entire Oil & Gas Financial Journal article, please click here.

 

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