Sound Analysis Supports Exporting U.S. LNG
Posted April 10, 2014
Legislation that would accelerate U.S. exports of liquefied natural gas (LNG) – by approving a backlog of more than 20 export permits pending with the Energy Department and expediting future permit requests for export to World Trade Organization members – cleared an important hurdle in the U.S. House this week.
“In the last few weeks, new proposals have won bipartisan support in both the House and Senate, and we are optimistic that members will come together on efforts to harness the full economic and strategic power of America’s energy exports. The U.S. is the world’s top producer of natural gas, and allies around the globe are looking to America for leadership on energy issues. Now is the time to tear down our own bureaucratic hurdles to trade, create thousands of new American jobs, and strengthen our position as an energy superpower.”
In the emerging global market for LNG, the U.S. could take a leading role – if we seize the opportunity provided by America’s shale natural gas bounty to meet domestic needs and supply friendly buyers overseas. But the window of opportunity could close. If the U.S. is to make the most of its chance to compete in the global LNG market, permit applications to build LNG export facilities should be swiftly approved. API’s Kyle Isakower, vice president for regulatory and economic policy, addressed the point last fall:
“America is in a global race to build this infrastructure and secure a competitive position in the international market. More than 60 international LNG export projects are currently planned or under construction around the world, and those nations that act quickly to attract these investments will reap the economic rewards.”
Now, let’s briefly review some of the false arguments raised by opponents of exporting U.S. LNG:
Effects on Consumers
Study after study projects that domestic natural gas prices likely will remain low over at least the next two decades, even with exports – reflecting the abundance of the U.S. resource base. Below, a summary of domestic price projections from a number of LNG export studies:
Natural gas price changes attributable to LNG exports remain in a relatively narrow range across the entire range of scenarios. …
The broader economic benefits of LNG exports will positively impact consumers. NERA:
Across all (studied) scenarios, the U.S. was projected to gain net economic benefits from allowing LNG exports. Moreover, for every one of the market scenarios examined, net economic benefits increased as the level of LNG exports increased. In particular, scenarios with unlimited exports always had higher net economic benefits than corresponding cases with limited exports.
As NERA’s David Montgomery recently explained to Congress, domestic natural gas prices will remain in check far into the future because the “increase demand for exports is almost all satisfied by increased production.” And our increased production will mean more jobs, more revenues generated for government and a lower U.S. trade deficit.
Greenhouse Gas Emissions
Some claim that more natural gas production, driven by growing market demand for U.S. LNG, will result in more methane emissions. Facts say otherwise.
The latest EPA Inventory of Greenhouse Gases found that while natural gas production grew 37 percent from 1990 to 2012, methane emissions from natural gas systems fell 17 percent. EPA also found that emissions from field production in recent years have fallen even more – more than 40 percent from 2006 to 2012.
A separate ICF study, associated with the Cove Point, Md., LNG export project, found that emissions from natural gas are not higher than the EPA has estimated (as some have claimed) and that exported LNG could yield a net reduction in emissions of up to 52 percent as it replaces more carbon-intensive fuels.
As for carbon dioxide, we’ll cite again the U.S. Energy Information Administration’s finding that rising natural gas use was a major factor in reducing U.S. emissions to their lowest levels in nearly 20 years.
U.S. LNG Won’t Help Allies Right Away
One clear message coming from the ongoing energy standoff between Russia and the Ukraine is that countries largely dependent on Russian natural gas – friends of the United States – want the U.S. to get into the emerging global natural gas market.
During a recent congressional hearing, Lithuania’s energy minister pleaded for the chance for his country to buy U.S. LNG. Last month, ambassadors of Europe’s Visegrad countries – Hungary, Poland, Slovakia and the Czech Republic – underscored the U.S. opportunity to change the energy security balance in a letter to U.S. House Speaker John Boehner:
Gas-to-gas competition in our region is a vital aspect of national security and a key U.S. interest in the region. It is for this reason that we now ask for your support. … As a recent report of the House Energy and Commerce Committee highlighted, the US now has a window of opportunity to act. The presence of US natural gas would be much welcome in Central and Eastern Europe, and Congressional action to expedite LNG exports to America’s allies would come at a critically important time for the region. Energy security is not only a day-to-day issue for millions of citizens in our region, but it is one of the most important security challenges that America’s allies face in Central and Eastern Europe today. Furthermore US export of LNG would not only meet the energy security challenge of the Visegrad countries but that of the wider region as well.
A couple of truisms certainly are true about energy infrastructure: (1) The best time to fix a roof is when the sun’s shining; and (2) While the best time to plant a tree was 10 years ago, the next best time to plant is right now.
Look at the global crude oil market. U.S. policies, born in an era of energy scarcity, now are preventing the U.S. from fully engaging in that global crude market. These add inefficiencies and erect obstacles that keep America from fully realizing its position as an energy superpower. Similar, export-limiting policies on U.S. natural gas could hinder potential positive effects of U.S. LNG on global supply.
There’s sound analysis that assigns broad economic benefits here at home to exporting LNG – jobs, economic growth and added energy production. The U.S. has the natural gas reserves to supply the domestic market and the needs of overseas allies. But opportunity’s window could close – limiting the benefits our natural gas wealth could provide.
About The Author
Mark Green joined API after a career in newspaper journalism, including 16 years as national editorial writer for The Oklahoman in the paper’s Washington bureau. Previously, Mark was a reporter, copy editor and sports editor at an assortment of newspapers. He earned his journalism degree from the University of Oklahoma and master’s in journalism and public affairs from American University. He and his wife Pamela have two grown children and six grandchildren.
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