The potential negative impacts of exporting liquefied natural gas (LNG) could be significant and far-reaching, according to a letter sent to Energy Secretary Steven Chu Wednesday by Rep. Edward Markey (D-MA), ranking member of the House Natural Resources Committee.
"I am worried that exporting America's natural gas would raise energy costs for American consumers, reduce the global competitiveness of U.S. businesses, make us more dependent on foreign sources of energy and slow our transition away from dirtier fuels," Markey said in his letter. Those consequences could slow the nation's transition "to clean, sustainable sources of energy, such as solar and wind" from coal and oil via the "bridge fuel," natural gas, he said.
Markey's letter follows the recent filing of an application by Gulf Coast LNG Export LLC to export 2.8 Bcf/d of liquefied U.S. natural gas to world markets (see Daily GPI, Jan. 3). Gulf Coast LNG is the eighth party to apply since 2010 to the Department of Energy's (DOE) Office of Fossil Energy for long-term authorization to export domestic gas as LNG.
The first party to apply for export authority, Cheniere Energy unit Sabine Pass Liquefaction LLC (see Daily GPI, Nov. 22, 2011), has received approval to export 2.2 Bcf/d under both Free Trade Agreement (FTA) and non-FTA provisions. Sabine Pass last week received a favorable environmental assessment for its project from the Federal Energy Regulatory Commission (see Daily GPI, Dec. 30, 2011). Overall, DOE has received applications to export 12.33 Bcf/d to FTA countries and 12.51 Bcf/d to non-FTA countries.
"It's been suggested that energy companies, if given the opportunity to export, would accelerate development of natural gas, perhaps enough so that U.S. consumers and businesses would not experience large short-term price increases," Markey wrote. "Indeed, in approving Sabine Pass, DOE was persuaded that 'this application will result in increased production.' I want to know why we should risk higher prices...I want to make sure we carefully consider our long-term economic and security interests before deciding to export our natural gas.
"If exporting means accelerated development, then we will more rapidly deplete natural gas resources that could help sustain future generations of Americans, leading to higher prices as resources diminish."
Markey asked Chu to provide the House committee with the answers to a series of questions about the potential impacts of exporting LNG and how the DOE weighs those issues when considering LNG export applications. Markey asked about the consequences of exporting "about 18% of the natural gas we now use" -- the amount that could be exported if all LNG export applications now before DOE are approved -- or more.
Markey also asked if DOE has assessed the effects of higher and lower gas prices on U.S. manufacturing; how DOE determines if exporting LNG is in the public interest; and other questions related to DOE's process for approving LNG export applications.
In addition Markey asked if DOE will withhold approval of pending export applications until two DOE-commissioned studies of the impacts of additional gas exports -- one from the Energy Information Administration and one from a private party -- are completed. The studies are expected to be completed during the first quarter.
While some groups representing the interests of consumers and industrial end-users of natural gas have raised concern that export of domestic gas would raise prices, a recent study by Deloitte found that the impact on prices of exports would be modest (see Daily GPI, Dec. 19, 2011).
Besides the potential for export from the Lower 48 states, the United States has been exporting LNG from Alaska for years. While the state's Kenai LNG terminal had been slated for closure, it recently got a new lease on life when operator ConocoPhillips said it would continue to operate, exporting gas from the Cook Inlet during 2012 (see Daily GPI, Dec. 20, 2011).
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