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ExxonMobil: Restricting LNG Exports is Like Imposing Price Controls
The “threat of regulatory overreach” in not allowing liquefied natural gas (LNG) exports “is tantamount to introducing price controls on natural gas,” ExxonMobil Chemical Co. President Stephen Pryor said Tuesday, directly countering the campaign of another chemicals giant, Dow Chemical Co., which has been heavily lobbying to protect its domestic feedstocks.
Restricting LNG exports “represents a selective and very harmful departure from free market and free trade principles to one that threatens government control on supply, and indirectly, price,” Pryor told the 2,500 industry executives attending IHS CERAWeek 2013 in Houston. It “would interfere with free trade in natural gas and impede investment.”
Why, he asked, “should the government discriminate between LNG investments to liquefy gas and chemical investments to solidify gas into plastic pellets? Both would produce value-added, American-made products. Both would create thousands of high-paying jobs. Both would grow the economy. U.S. gas resources are enormous. We should do both.”
“These opponents of exports want government to block LNG projects that might cause gas prices to rise above an artificial price ceiling, thereby reducing the domestic cost advantage.”
The “protectionist plea” for limiting exports “seems to assume that energy supply and demand is a zero-sum game — but that’s not the way free markets work. Increased demand for gas due to LNG exports would likely encourage increased supply. Conversely, if government arbitrarily restricts demand and attempts to cap prices, supply would likely shrink.”
Top executives with Dow Chemicals have made no bones about their opposition to exporting domestic LNG because they claim that exports would raise gas prices and stifle business (see Daily GPI, Jan. 21). However, ExxonMobil, which by some estimates tops or just trails Dow in U.S. chemical manufacturing, has been a strong export proponent.
Pryor emphasized the company’s strong support of exports at the same time he told the audience that ExxonMobil’s multi-billion-dollar plan to build the world-scale steam cracker at its Baytown, TX petrochemicals complex is on track. The new plant will convert ethylene to polyethylene products and export them to global markets (see related story).
The company has a foot in both camps. ExxonMobil at one time pushed for LNG imports; it now is co-venturing on a $10 billion proposed LNG export project in Texas, Pryor noted. The U.S. Department of Energy last year authorized LNG exports by Golden Pass Products LLC from its terminal in Sabine Pass, TX (see Daily GPI, Oct. 9, 2012). The Golden Pass LNG terminal is owned by ExxonMobil (30%) and Qatar Petroleum International (70%); the proposed import/export project would be able to send out up to 15.6 million metric tons/year of LNG.
Nevertheless, “We need to go beyond viewing this opportunity through a narrow or nationalistic lens….We’re looking at a paradigm shift flowing from the new age of unconventional oil and natural gas…This historic moment is also a reminder of something we know very well in the American chemistry community,” Pryor said. “Businesses and investors are the true sources of innovation and job creation…
“At this moment, we need government leaders and policies that also trust our long history of driving advancement and opportunity. And it falls to us to tell the extraordinary story of unconventional oil and gas in a way that inspires a renewed confidence in the power of business and free markets to build a better world.”
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