NEW ORLEANS (AP) — The first international shipment of liquefied natural gas in decades from the Lower 48 states is poised to leave for Brazil from Louisiana.
Cheniere Energy Partners L.P. announced Wednesday that a ship bound for Brazil was being loaded with LNG at its Sabine Pass facility in southwest Louisiana.
The shipment is significant because it highlights the strength of U.S. natural gas production, which has surged because of advancements in fracking and shale gas extraction.
Cheniere is among several companies developing natural gas exporting facilities. In statements, the company characterized the shipment as a “historic event” opening “a new chapter for the country in energy trade.”
Still, it’s far from clear if the market for exports will be robust now that international natural gas prices have been dragged down by low oil prices.
“The milestone of delivering the first cargo is a nice PR milestone, but it doesn’t mean very much in the grand scheme of things in terms of the business,” said Pavel Molchanov, an energy market analyst with Raymond James & Associates. “What will ultimately matter for the business is what is the pace at which the Sabine Pass is ramping up operations.”
The Houston-based company did not immediately reply to questions about how much it expects to ship out this year.
Molchanov said the outlook for natural gas exports was uncertain. “Look, the economics of the LNG market leave much to be desired,” he said.
Eric Smith, the associate director of Tulane University’s Energy Institute, said he expects the Cheniere facility to be a success because it has long-term contracts for more shipments and U.S. natural gas production remains strong.
“We have all the natural gas that we need or want,” he said. “There’s plenty of gas in the ground.”
Smith said LNG has been shipped from Alaska to Japan since 1969. In the Lower 48 states, he said natural gas was exported in the 1950s. Natural gas production has surged in recent years and led to the possibility of exports.
“This is historic in the sense that it’s been a long, long, time since we’ve had enough gas to worry about a shipment,” Smith said.