The Department of Energy (DOE) has placed requests for future exports of liquefied natural gas (LNG) on hold until it can assess their impact on the domestic price of natural gas, Energy Secretary Steven Chu told a Senate panel Thursday.
“We are not going to do anything [on LNG export applications] until we make a determination what the impacts will be be [on domestic gas prices],” he said during a hearing before the Senate Energy and Natural Resources Committee on DOE’s budget request for fiscal year 2013.
“Certainly our minds are not made up,” yet about LNG export applications he assured Sen. Ron Wyden (D-OR), who asked the secretary to “disabuse me of the theory that you’ve already made up your mind” on this issue.
“Whatever we decide it has to be in the best public interest,” Chu said. “There is a flip side to this that we also have to consider: that if [it] does create American jobs and if prices are kept moderate, that it does bring money into the United States. It helps [with the] balance of trade.”
Wyden cited a recent study by the DOE’s Energy Information Administration (EIA), which concluded that LNG exports could increase domestic gas prices by more than 50%, costing American industry and gas customers as much as $43 billion (see Daily GPI, Jan. 20). DOE is still awaiting the results of a second study.
“Certainly we don’t want to see natural gas prices rise dramatically,” Chu responded. However, if not done right, Chu conceded that LNG exports “could have that effect.”
So far “We [have] permitted one liquefied natural gas terminal [for export of LNG to non-free trade agreement (non-FTA) countries — Cheniere Energy’s Sabine Pass terminal]. We determined that that would have de minimis impact on the price of natural gas in the United States,” Chu told the Senate panel (see Daily GPI, Jan. 23).
Overall, DOE has received applications to export 12.33 Bcf/d to FTA countries and 12.51 Bcf/d to non-FTA countries. The amounts are not additive. A number of the applications for exports to FTA countries have been approved almost automatically because those are governed by treaty. However, since there are only a limited number of FTA countries, it is the approval for exports to non-FTA countries that can make or break a project.
In 2011 U.S. gas consumption was approximately 65 Bcf/d, while gross withdrawals from U.S. wells totaled about 71 Bcf/d, according to EIA.
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