Now may not be the best time to unveil plans to export liquefied natural gas from the U.S. But don't tell Charles "Buddy" Roemer.
The former governor of Louisiana will formally announce Monday one of the largest LNG-export proposals in the U.S., at a time when faltering demand for gas in Asia, as well as low prices, threaten the viability of ventures much further along the way than his.
"There may be 40 ahead of us in the world already producing, but there are 30 behind us, and something is happening," said Roemer, chairman of a Baton Rouge-based G2 LNG. "This will be a powerful industry."
The company is assembling a project worth nearly $11 billion, which would make it one of the biggest energy undertakings ever in Louisiana. Over 30 years, G2 LNG would export 672 billion cubic feet of LNG annually to China, Europe, the Caribbean and India.
G2 LNG has already made progress on the regulatory front, having obtained approval from the Department of Energy earlier this year to export gas to countries with free-trade agreements with the U.S. Now, it's awaiting word from DOE on an application to sell to other countries, including China and India, and intends to file soon with the Federal Energy Regulatory Commission for permission to build the necessary facilities.
This comes as leading energy authorities like the International Energy Agency caution that Asia and other markets will be unable to absorb most of the LNG capacity of plants proposed or under construction in the U.S. and elsewhere for the next five years or so. The industry leader in the U.S., Cheniere Energy, plans its first shipments in December from a facility in Louisiana.
But Roemer, a banker as well as Louisiana's governor from 1988 to 1991 and a congressman from 1981 to 1988, says some energy analysts overlook the long-term potential for LNG demand in the world, especially in light of global concerns over climate change and recognition that gas is a cleaner-burning fuel than coal and oil.
"Natural gas will be the product of the future," he said in an interview. "It will take the place of coal. It will take the place of oil. It will be a threat to the old empire."
Moreover, according to Roemer, U.S. LNG will become increasingly appealing in comparison to gas from other, less stable regions of the world, like Russia and the Middle East.
"The thing that's attractive about America is its consistency," he said. "It's the fact that you make a deal and we honor it. It's not (Russian President Vladimir) Putin. It's not the Middle East. It's America, and I think this energy business will be important to America. That's the reason we started this venture. I know there's competition. I like that. But the chance to deliver a promise made in America around the world is powerful to me."
Patriotism aside, Roemer maintained that G2 LNG enjoys competitive advantages compared to some other U.S. export projects. Among them, FERC has already issued a favorable environmental review of the site on the Calcasieu Ship Channel in Cameron County when it was under consideration for an LNG-import operation several years ago. He said should bode well for his project.
Perhaps even more important, G2 LNG owns gas resources in east Texas that it would draw on for exports, giving it flexibility in negotiating contracts with foreign customers, and the firm is looking for more gas acquisitions in Texas and Louisiana.
"We can place a price on it differently than anybody else," he said.
In short, Roemer maintains that G2 LNG will be well positioned by 2020, when it expects to complete construction of the facilities and begin shipping gas. While he acknowledged that forecasting gas prices is difficult, he said he is sure the market will have absorbed the current surge in LNG exports and will be looking for much more.
"Some people can't see past their feet," he said of the caution flags being raised over the number of pending LNG export projects. "Other people know they're standing on a mountain. I've always taken the long view."