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DOE Delays Report on LNG Export Economic Impact

The Department of Energy (DOE) has postponed the release of the second part of its study on the economic impact of exporting domestically produced liquefied natural gas (LNG) until year-end, which will keep the controversial issue from becoming a political football in the presidential election in November. Republicans generally support exports of LNG because of abundant domestic shale resources, while Democrats for the most part don't for fear that exports would raise prices U.S. consumers pay for natural gas.

"The Obama administration appears to be cautiously deferring an explicit decision until after the November elections..The administration has no reason to make a comment before the election in the absence of criticism from [Republican presidential candidate Mitt] Romney and Republicans on Capitol Hill," wrote ClearView Energy Partner LLC energy analysts in a new report.

The results of the second half of the study -- assessing the impact of LNG exports on domestic gas prices, job creation, gross domestic product and the balance of trade -- were due out by late summer, a DOE spokesman said in June (see NGI, June 4). That part of the study, which may recommend limiting exports to 6-7.4 Bcf/d, is being conducted by an independent third-party contractor.

"The analysis is still in progress. Once complete, the department will post the report for public comment in connection with the pending applications" for exporting LNG to countries with which the United States does not have free trade agreements (FTA), DOE said. "The department will then continue the process required by statute to make public interest determinations on the pending applications."

In April DOE approved the first application for a company -- Cheniere units Sabine Pass LNG and Sabine Pass Liquefaction -- to export LNG to non-FTA countries. Since then it has put the permitting process for non-FTA applications on hold pending the completion of the second half of the two-part study. There currently are 12 non-FTA applications awaiting action by the DOE to export a total of 18.66 Bcf/d of domestically produced LNG from the Lower 48 states, according to the DOE's Office of Fossil Energy (see related story).

"There isn't much chance that outbound cargoes from facilities under consideration will begin shipping before 2016," said the ClearView energy analysts.

The first half of the study was conducted by the Energy Information Administration and was completed earlier this year. It found that LNG exports could increase domestic gas prices paid by residential, commercial and industrial customers by a range of 3-9% (see NGI, Jan. 23).

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