Wednesday, January 16, 2013

A Win-Win Way to Export Natural Gas

If the proposed G2X Energy gas-to-methanol-to-gasoline plant is built in Lake Charles, it would be a sneaky way to export natural gas without raising a the ire of folks like Dow Chemical that are raising a ruckus protesting the prospect of LNG exports.

The proposed G2X location on a canal is intended to facilitate the transport of the end product by boat or pipeline. Given the restrictions of the Jones Act, presumably all gasoline (and propane) that goes by water will be exported to other countries.  This is a win-win workaround of the natural gas export problem because G2X would be exporting a value-added product created from natural gas.  The manufacturing jobs stay in the U.S. and the company exports a higher value product than the raw material of natural gas.  Other than environmentalists, who could object to that?

European steel manufacturers Voestalpine and ThyssenKrupp are pursuing a somewhat similar strategy.  Because of high energy costs, steel production in Europe is facing deep competitive pressures.  As a solution, Voestalpine is scouting sites in the U.S. and Canada to build a plant to take advantage of cheap North American natural gas to convert iron ore into either iron sponge or iron briquettes that would exported to Europe to be used as an input in the company's European steel plants.  Effectively, U.S. raw materials of gas and iron ore would be converted into a manufactured product for export (although the gas is not directly exported).  Longer term, Voestalpine indicated that it might build mini-mills in North America to make steel from iron briquettes or scrap materials.

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