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US oil, chemical companies battle over shale gas exports

April 02, 2013
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Companies operating in the energy sector are rarely involved in open battles over market share, pricing or access to resources. Despite the large capital at stake, the risks involved in such a confrontation are too big for everyone involved. However, the shale gas revolution in the United States may prove too profitable for large companies to try to keep the balance.

According to the Quartz website, U.S. oil companies and chemical companies are at war for control of the nation's natural gas supply.

Billions of dollars have been invested in the development of U.S. shale gas reserves and the money pouring in is not only from local businesses but also from huge corporations around the world. The surge in production has changed the global energy map by making the United States energy independent, while Russia's position has been weakened. Meanwhile, Europe has seen an increase in supplies.

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But the surge in output has pushed prices of U.S. natural gas to such a low level that drilling companies now claim they are hardly making any profit at all. In a bid to deal with this problem, they have started to look for possibilities to export their production in the form of liquefied natural gas (LNG).

The British gas company, BG Group, for example, is seeking to export about 20 billion cubic meters of LNG from Louisiana over 25 years, Quartz reported.

However, such plans might be hampered by chemical companies, which insist that exports of natural gas should be restricted. They claim that allowing unlimited exports would have an adverse effect on the U.S. industrial and manufacturing sectors, which are both currently thriving amid abundant supply of cheap feedstock. Some of the largest chemical companies, including Dow, Huntsman and Alcoa, have joined forced to form a lobbying group, called America's Energy Advantage. They have warned that as many as six million jobs in the United States might be lost if exports were given the green light.

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