On May 21, a massive ship called the LNG Sakura unloaded its cargo in Japan. The ship was carrying liquefied natural gas (LNG) all the way from the Cove Point plant in Maryland. The shipment was a major breakthrough for America’s growing natural gas export business. Cove Point is just the second American export company to complete a shipment since the shale boom started, and shipments from America’s east coast to Japan (the world’s largest LNG customer) were made possible by a recent expansion of the Panama Canal.
The Dominion Cove Point terminal was certified to begin accepting shipments of LNG in 1972. Dominion is a utility company providing electricity and natural gas to customers across much of the mid-Atlantic, and the company was seeking new supplies. It received shipments from Algeria in the 1970s, and it put that gas into the local distribution systems. In the 1990s, the plant added liquefaction capabilities, and it was used to liquefy and store gas. Once the shale boom took off in the mid 2000s, the plant was converted to an export facility primarily under long-term contracts to serve two main customers, Tokyo Gas of Japan and GAIL of India.
A tanker leaving an east coast terminal really needs to go through the Panama Canal in order to make deliveries to a place like Japan economic. The canal was completed in 1914, and it provides a quick connection between the Atlantic and Pacific Oceans, saving ships a long journey around South America. Until very recently, the 100-year old canal was too small to properly accommodate massive LNG tankers. A major expansion was completed in 2016, though, and the canal has had hundreds of LNG tankers pass through since. LNG and liquid petroleum gas (LPG) ships are now the fourth-largest source of traffic for the canal.
Cove Point may be just the second operational LNG export facility in the United States, but dozens more are in various stages of development. America is expected to become a major player in world gas markets. The shift from importing LNG in the 1970s to exporting now is only possible because of the boom in shale gas production led by the Marcellus Shale formation. If you would like to explore exploration and production opportunities in Pennsylvania, Ohio, or West Virginia just call (412) 212-7517 to speak with the experts at Cimmaron Land.