Exporting liquefied U.S. gas could create tens of thousands of jobs but would have “only minimal impacts” on the prices U.S. consumers and industry pay for gas supply, according to a new report prepared by ICF International for the American Petroleum Institute (API). It’s the latest word, of many, in the ongoing discussion about whether exporting some of America’s gas bounty is prudence or folly (see related story).
ICF also found that liquefied natural gas (LNG) exports would “spur strong growth” of the U.S. gross domestic product (GDP). However, it said, would-be exporters face abundant and tough competition as at least 63 international LNG export projects are planned or in the works.
“Increasing LNG exports is clearly in our national interest and will help the U.S. reach the president’s goal to double U.S. exports,” API CEO Jack Gerard said. “The industry is ready to invest in American infrastructure to create jobs and produce more domestic energy as soon as the Department of Energy moves forward with the approval of LNG export applications. Timely approval of LNG exports is crucial if we want to be competitive with international projects rushing to be first to market.”
ICF’s findings are largely in step with what NERA Economic Consulting said in its report, which was commissioned by the U.S. Department of Energy (DOE) and released at the end of last year. Across all scenarios considered by that study, “the U.S. was projected to gain net economic benefits from allowing LNG exports,” NERA said (see NGI, Dec. 10, 2012a).
That report was quickly blasted by The Dow Chemical Co., a large gas consumer (see NGI, Dec. 10, 2012b), which in March came out with a study by Charles River Associates that argues against exports and the methodology of the NERA study (see NGI, March 18).
Deloitte has also weighed in, twice (see NGI, Jan. 14; Dec. 19, 2011), as has the Brookings Institution (see NGI, May 7, 2012) and Wood Mackenzie (see NGI, April 2, 2012). Meanwhile, DOE has been seen by some to be dithering on its duty to decide whether to allow export of LNG to countries that are not parties to free trade agreements with the United States (see NGI, Feb. 18).
The API/ICF study, “U.S. LNG Exports: Impacts on Energy Markets and the Economy,” looked at the impacts of LNG export levels of up to 4, 8 and 16 Bcf/d by 2035. According to the study, average net job growth due to LNG exports is projected to be 73,100-452,300 between 2016 and 2035. Manufacturing job gains average 7,800-76,800 net jobs between 2016 and 2035, including 1,700-11,400 net chemical, petrochemical and refining job gains.
U.S. GDP growth is projected to be positive at about $15.6073.6 billion annually between 2016 and 2035, the study found. LNG exports also are projected to have moderate impacts on domestic U.S. natural gas prices of about 32 cents to $1.02/MMBtu on average between 2016 and 2035, resulting in 2016-2035 average Henry Hub price estimates of $5.03-5.73/MMBtu. In addition, exports are expected to help rebalance the domestic gas markets through production increases (79-88%), a reduction in domestic consumption (21-27%), and changes in pipeline trade with Canada and Mexico (7-8%). The sum of the three supply sources exceeds actual LNG export volumes by roughly 15% to account for fuel used during processing, transport and liquefaction.
The release of the API/ICF report last Wednesday was hosted by the Liquefied Natural Gas Export Working Group for the 113th Congress, which was formed in March to advocate for DOE to permit LNG export projects. It was founded by Ohio House Reps. Tim Ryan, a Democrat, and Republican Bill Johnson.
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