00:00Fracked U.S. gas will now flow through Mexico. The fracking boom turned the United States
00:07into the world's largest natural gas producer and exporter. Energy giants like ExxonMobil,
00:13based in the U.S., have the supply. Countries around the world, including many in Asia,
00:19have the demand. They are using even more natural gas, partly to move away from coal
00:23and oil. Mexico is key to America's continued dominance, as the natural gas will flow through
00:29terminals in or near the Gulf of Mexico, bypassing the drought-stricken Panama Canal. Recently,
00:35we spoke with Baird Langenbrunner, research analyst at Global Energy Monitor. Here's that
00:40conversation.
00:41So when it comes to this global supply of natural gas, where does the U.S. fit in?
00:47In terms of exporting natural gas, the U.S. is in the lead in the world and followed closely
00:52by Qatar and Australia. And the U.S. is also the world's largest producer of natural gas.
00:58So then how did the U.S. rise to become such a key player in fracking, and is this a good
01:03thing for us?
01:05So yeah, the U.S. wasn't producing or wasn't exporting a ton of gas. In the mid-2000s,
01:13this fracking boom happened, so U.S. energy producers realized that they could shoot water
01:18into bedrock and release a lot of gas in a couple different bases in the U.S. And at
01:25the same time, some other forces made natural gas prices go up, so the U.S. started exporting
01:31a lot.
01:32The question of whether it's good for us or not, it really, I think, depends on who you're
01:35asking or what you're asking about. I think it's been really good for oil majors and energy
01:43companies. It's also been a good geopolitical tool for the U.S., so that's a positive in
01:49some ways for some people. And there's also a lot of reasons that increased gas exports
01:55is not great. Increasing gas exports in the U.S. exposes gas prices to the international
02:03market, so it can raise prices domestically, and so that can affect what we pay at home
02:08or at the gas pump. And burning them creates greenhouse gas emissions, so it can lead to
02:14climate warming.
02:16In order to export it right now, the Panama Canal is having a whole slew of issues. It's
02:21drought-stricken. There's a lot of backlog with boats trying to get through it. So now
02:25the U.S. has turned to rely on Mexico for that distribution. Can you explain some more
02:30of the issues happening with the Panama Canal and how Mexico is now taking on this responsibility?
02:37Sure, yeah. So the U.S.'s natural gas export, to get natural gas out of the U.S., you have
02:46to pipe it out of the basins where it's produced, and then you have to liquefy it, so cool it
02:51down a lot from gas to liquid state. You load it on the ships, and you ship it out. And
02:56the major places that the U.S. is shipping to are Europe and Asia. So the majority of
03:02export terminals in the U.S. are along the Gulf of Mexico, so along the Louisiana and
03:07Texas coast. And to get natural gas to Europe, it's a pretty straightforward ship trip across
03:14the Atlantic Ocean from the Gulf Coast. But to get that gas to Asia, you have to cross
03:19the Panama Canal. And that is a major thoroughfare for ships going from the Atlantic to the Pacific
03:24Ocean. And this year specifically, it's an El Niño year, which is leading to a pretty
03:29large drought in the region around Panama and the canal. And because of that and also
03:35population change, a lot of the fresh water that's needed for that canal to operate is
03:39not quite there. And Mexico is becoming a potential alternative for this route because
03:47there are some liquefied natural gas export terminals proposed along the Mexican Baja
03:53Coast, and that would allow ships to load up on the Baja Coast or on the Pacific Ocean
03:59side of things and go straight to Asia without having to go through the canal. So specifically
04:03for Asian gas exports, these terminals in Mexico, which are largely either proposed
04:09or under construction, they could be an alternative route to getting gas out to Asia.
04:15The Biden administration, they also recently suspended the approval process for new export
04:20terminals. Do you know why that is?
04:23Yeah. So what the Biden administration has suspended is the Department of Energy's approval
04:29process. So for these terminals to function, they need to get approvals from a couple of
04:35different agencies. And for terminals in Mexico specifically, they only need approval
04:40from the Department of Energy. But the Department of Energy is tasked with the process of
04:47deciding whether any export terminal that's newly built is in, quote unquote, the public
04:52interest. And the Biden administration has effectively asked the DOE to define that
04:57better and use things like greenhouse gas emissions impacts, so climate impacts, and
05:04domestic price impacts, and national security and energy security impacts to be
05:10considered as part of this approval process. But this is effectively a push from the
05:16Biden administration to ask the DOE to have a more specific process in place to
05:25understand whether a terminal really needs to be built and really needs to ship gas out of
05:29the U.S.
05:30Listen, I know it's a complicated, tough topic to discuss, but I can't thank you enough
05:35for breaking it down for us and our viewers.
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