Abe will ask Obama for shale exports as Japan’s gas bill soars

Nuclear Test

The agenda for Abe’s talks with Obama also include North Korea’s recent nuclear test and Japan’s participation in the proposed Trans-Pacific Partnership free trade pact, the officials said.

The use of hydraulic fracturing, a process that injects a pressurized mix of water, sand and chemicals into wells to open cracks in shale rock and allow gas to flow out, started to reverse a decline in U.S. production about 7 years ago. Since the start of 2006, gas output has grown 33%, according to the Department of Energy.

Opponents to U.S. exports include Representative Edward Markey of Massachusetts and Senator Ron Wyden of Oregon, who say U.S. consumers and manufacturers will be forced to pay higher energy prices.

LNG exports would have “net economic benefits” for the U.S., according to a study conducted by NERA Economic Consulting on behalf of the U.S. Department of Energy.

Crippled Plant

Tokyo Electric, the owner of the crippled Fukushima Dai-Ichi nuclear plant, plans to buy 800,000 tons of LNG from the Cameron project in Louisiana for 20 years starting in 2017, it said earlier this month.

Chubu Electric, Japan’s third-largest power company, and Osaka Gas Co. announced 20-year contracts in July with Houston- based Freeport LNG Development LP to export 4.4 million ton of LNG from the proposed facility in Texas starting in 2017.

Sumitomo, Japan’s third-biggest trading company, and Tokyo Gas Co. agreed in April to buy 2.3 million tons of LNG for 20 years from Dominion Resources Inc.’s planned Cove Point terminal in Maryland, due to start in 2017.

“How we can buy LNG is an important factor for Japan’s government to tackle with the private sector,” Yukio Edano, then trade minister, said on Sept. 18. “Procuring the fuel at low cost, has become a key challenge for us.”

Japan’s LNG imports rose to a record in 2012 as the country increased its dependence on gas-fired power plants to make up for lost nuclear generation. The country’s LNG imports rose 11% to 87.3 million metric tons last year, the Ministry of Finance said Jan. 24.

Japan’s NHK television reported Feb. 19 that Abe would ask Obama to clear shale gas exports.

Bloomberg News

<< Page 2 of 2

Copyright 2014 Bloomberg. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

Comments
comments powered by Disqus
Check out Futures Magazine - Polls on LockerDome on LockerDome