The success of new extraction technology, such as fracking, has turned the U.S. oil and gas market around over the last. By 2020, it is estimated that there will be enough gas produced in the U.S. each year to more than cover the demands of the domestic market. Gas companies are now looking further afield in their search for customers, with export deals being struck with gas companies in other countries. For example, in March 2013, Cheniere Energy Partners entered in to a deal with U.K.-based gas company Centrica to supply 89 billion cubic feet of liquefied natural gas each year from 2018.

However, the prospect of American natural gas being exported to other countries worries some U.S. business users, including large chemical companies that depend on a reliable and competitively-priced supply of gas to run their production processes. These companies fear that the diversion of natural gas supplies to lucrative export markets will lead to business gas suppliers driving up prices within the U.S.

Why Has Gas Extraction Increased?
Since the late 1990s, oil and gas companies have been able to use a process called fracking on an industrial scale. This process allows them to access trillions of cubic feet of gas that was previously inaccessible. As a result of the increased extraction rates, it is estimated that oil and gas companies will be able to produce more gas than domestic customers require.

How Is Gas Exported?
Countries that do not have their own gas supplies or consume more gas than they produce need to import gas from abroad to fill the gap between supply and demand. Because the U.S. is heading toward a situation where it will be able to produce more gas than it consumes, oils and gas companies could sell the surplus to countries in Asia and Europe.

Under the Natural Gas Act of 1938, oil and gas companies must obtain a license from the Department of Energy (DOE) before they can export gas from the U.S. The DOE must ensure that domestic gas supplies are not put at risk by export activity. If all the licenses currently under consideration by the DOE were granted, one-third of the amount of gas currently used in the U.S., approximately 30 billion cubic feet of gas per day, could be sent abroad.

The DOE is only able to restrict the export of gas to countries that do not have a free-trade agreement with the U.S., such as the U.K., China, and Japan. The DOE has less control over countries with a free-trade agreement. However, three of the four biggest FTA consumers of natural gas are Australia, Canada, and Mexico. These countries do not import high levels of natural gas. The fourth member of this group is South Korea, which is both a large user and major importer of natural gas.

However, securing a license is only the first stage in the process. Before gas can be exported it needs to be treated at a gas liquefaction plant. At these plants, natural gas is liquefied at extremely low temperatures, around -162 degrees centigrade. This substantially reduces its volume, allowing it to be loaded on to specially-constructed tankers. When it arrives at its destination, the gas is brought back up to ambient temperature, enabling it to be supplied to consumers through normal distribution channels.

Liquefaction plants are extremely expensive to build. Even extending or converting existing structures can cost billions of dollars. ExxonMobil and Qatar Petroleum International have entered in to a partnership to expand the natural gas facility at Golden Pass Import Terminal in Texas. The expansion would allow them to export 2.6 billion cubic feet of gas per day. It is estimated that the project will require a total investment of $10 billion.

The Benefits of Exporting Gas:
The oil and gas companies that propose to export natural gas see an opportunity to increase their profits. However, the wider economy could also benefit from the export of natural gas. In a study carried out for the DOE by NERA Economic Consulting, a private company, the conclusion was reached that exports would add billions of dollars to the U.S. economy. Working with a range of possible scenarios, the company estimated that the economy would benefit by between $4.4 billion and $47 billion.

Jobs could also be created, both by the construction projects to build liquefaction plants and the ongoing processing of natural gas. At Golden Pass, the ExxonMobil and Qatar Petroleum International partnership estimates that thousands of new jobs would be created as a direct result of natural gas exports. During the five years of construction, 9,000 direct jobs would be created with 200 direct jobs associated with the ongoing export activities.

Concerns Around Exporting Gas:
There is a concern, particularly from business users, that exporting gas will drive up prices for American customers. This fear seems to be supported by a 2012 study carried out by the Energy Information Administration (EIA), the independent research arm of the DOE. In its report, the EIA suggests that gas exports could lead to a shortfall within America that may need to be covered through importing gas from Canada. It predicts that natural gas prices could increase by 3% to 9%.

If companies are charged higher prices by their business gas suppliers, production costs will rise. This could impact on their competitiveness and reduce their profits.

What is the Alternative?
If American oil and gas companies can extract more gas from the ground than domestic consumers require but then cannot export it, what alternatives are available?

Many of the companies who are most concerned about the prospect of rising gas prices process chemicals on an industrial scale. These companies argue that, rather than exporting natural gas in its unprocessed state, America should add value to it by processing it into derivative, such as polyethylene and polypropylene. Along with adding value to the exported products, this would help to secure and create jobs for workers in American chemical processing plants.