* DOE approval is for exports to all major LNG importers
* Cheniere can export 803 bcf of gas per year
* Cheniere plans to bring export project online in 2015
* LNG.A shares rise more than 30 percent (Recasts, adds details throughout, analyst and CEO quotes)
By Edward McAllister
NEW YORK, May 20 (Reuters) - Cheniere Energy (LNG.A) received approval on Friday from the Department of Energy to export U.S. natural gas to major importers overseas, the first such authorization in over forty years, the company said on Friday.
Assuming Cheniere is granted a subsequent license from U.S. power regulators to build an export plant in Louisiana, it may become the first company to ship LNG abroad since the production of vast shale reserves flooded the U.S. market in recent years.
Cheniere has the authorization to export up to 803 billion cubic feet of natural gas per year to major LNG importers across the globe, from Brazil to Japan, in the form of liquefied natural gas, Cheniere said. That amounts to more than 3 percent of U.S. gas consumption.
“With the unprecedented growth in unconventional reserves, supply of natural gas (in the United States) continues to outpace demand dramatically,” said Cheniere chief executive Charif Souki.
“The U.S. has an opportunity to become a significant supplier in the global energy markets,” he added.
Cheniere’s shares rose more than 30 percent to $10.20 per share on the news.
The Houston-based company already had approval to export natural gas to countries with which the United States has a free-trade agreement, a group that excludes all major importers. Friday’s move opens up the export to all importing nations.
Cheniere expects the export plant will come online in 2015 on the site of its existing LNG import terminal in Louisiana. The plant will cool the natural gas to liquid for shipping overseas in specially designed tankers.
The approval is subject to the Federal Energy Regulatory Commission giving authorization to build the export plant. FERC is conducting an environmental assessment of the project.
“The FERC approval is procedural and we do not expect any problems with that,” Souki told Reuters in a phone interview.
He said the company expects to break ground on the project by the first quarter of 2012, and to begin signing firm supply agreements within 60 to 90 days.
The first and only U.S. LNG export plant was built in Alaska 40 years ago, but is now in the process of shutting down because it is no longer competitive with newer suppliers in Asia. In its place, a wave of new export proposals have emerged to ship low-cost U.S. gas to high-paying markets overseas.
Cheniere is the most advanced of three U.S. export projects in various stages of regulatory review, including Southern Union’s Lake Charles project in Louisiana and the Freeport LNG project in Texas. Two other projects are under review for export from Canada to Asian markets.
“Three or four years ago, the knee-jerk response would have been that we’re running out of gas, but I think political support for this has been building,” said Adam Sieminski, chief energy economist at Deutsche Bank in Washington D.C.
“Given the reserve additions in shale gas, it’s certainly not an issue from a supply and demand standpoint,” he added.
For a factbox showing North American export projects under consideration, click here: [ID:nN10179854]
LOW US PRICES
The bet is that low U.S. gas prices, pressured by large domestic production increases since 2007, will remain far enough below Asian and European prices for profitable export over a long time period.
With U.S. gas prices around $4 per million British thermal units, Cheniere believes it can sell LNG ready for shipping in Louisiana for less than $7, arriving in Europe for about $8 per mmBtu, Souki told Reuters.
Gas futures in major importer Britain were about $9.30 per mmBtu on Friday. Asian spot LNG prices rose above $13.
“With most analysts forecasting (U.S.) gas prices to remain below $6 per mmBtu over the next few years, the incentive to move quickly on LNG exports is high, and we expect effort to speed-up export proposals,” Sieminski said in a note earlier on Friday.
(Additional reporting by Joe Silha in New York and Tom Doggett in Washington, editing by Jonathan Leff and Sofina Mirza-Reid)