Natural Gas To Go Abroad; Biomass Says ‘Bon Voyage’

There is an obvious angst around the continued delay by the DOE to approve applications that would allow the export of natural gas from the U.S. to foreign markets. The angst for the DOE to approve natural gas exports is obvious given current price discrepancies in other countries. While the spot price for natural gas in the U.S. hovers around $4 an MMBtu, Europe pays around $12 and Japan $18 for the equivalent amount. The substantial difference in domestic and foreign prices has led twenty different groups to apply to the DOE for permission to export domestically produced natural gas. The natural gas boom in the U.S. and the companies behind it are looking to go abroad where greater profits await, and they have considerable support behind their effort. For the biomass-to-energy industry, the export of natural gas is a boon for future growth. There is no arguing that biomass projects compete directly with natural gas for electricity production, thermal demands, and (in much lesser terms) for transportation fuel production. When deciding the type of energy project to build, project developers weigh the many costs associated with potential energy inputs and the capital needed to convert the energy feedstock into a usable energy product. Most often, if not always, project developers go with the project that has lowest associated costs that accomplish the original goals. Biomass has many inherent advantages to natural gas, but in regards to price, natural gas currently wins. By expanding natural gas exports in the U.S., the price difference that allows natural gas to trump biomass as a raw energy feedstock would be reduced. Furthermore, by allowing natural gas export, the domestic spot price market for natural gas would be affected by fluctuations in foreign natural gas markets around the world. We can strongly assume that the added influence of foreign markets on domestic natural gas prices will instigate greater and more erratic domestic price fluctuations. Hedging and other tricks to mitigate erratic prices will become more widely needed to maintain profit from natural gas energy production. Greater stability in raw material prices for biomass is an asset that energy developers must take into account for the long-term economic stability of current and future energy projects. Biomass will likely see greater attention among developers as the DOE moves forward on the twenty applications pending approval, which it seems to be doing slowly .   Taylor Scott International