The battle between companies that stand to benefit from liquefied natural gas (LNG) exports and those that benefit from the low price and abundance of natural gas in the United States is intensifying. Chemical giant Dow Chemical Co. left the National Association of Manufacturers (NAM) over an export dispute, while Huntsman Corp. joined America’s Energy Advantage, a coalition opposed to LNG exports.
“Dow supports a balanced export policy; one that incentivizes sustainable natural gas production, maintains a competitive advantage for U.S. manufacturers and allows oil and gas producers to enter foreign natural gas markets,” the company stated. “The unfettered export of natural gas is widely understood to have serious implications for the cost and volatility of manufacturing feedstock prices.
“At Dow we strongly support manufacturers and will continue to pursue common-sense policies that promote our sector and job creation.” The Midland, MI-based manufacturer said earlier this month “NAM adopted a new position on this issue which places the interest of oil and gas producers above the interests of its manufacturer members. For these reasons, Dow has chosen to withdraw from membership.”
On its website, NAM said it “strongly supports federal and state policies to accommodate growth in domestic natural gas production. We further believe abundant domestic natural gas resources can fuel a renaissance in U.S. manufacturing. The NAM fundamentally supports free trade and open markets.”
“Proposals that seek to limit LNG or coal [exports] or any other product would have far-reaching negative effects on the United States and should be rejected. Such restrictions limit economic opportunities and stifle job growth rather than provide a source of increased economic growth,” wrote Linda Dempsey, NAM’s vice president of international economic affairs, on NAM’s blog earlier this month in a post titled “Banning LNG Exports Will Hurt Jobs and Economy.”
Dow Vice President George Biltz, who heads the energy and climate change division, told NGI that the company has identified more than 90 capital investment projects — a combined investment of about $80 billion — that are in the planning phase nationwide, all of which have been made possible by the bounty of natural gas in the United States. Many of the expansions are planned for the Gulf Coast including “a world-scale” ethylene production plant to be built in 2017 and a propylene production facility to be built in Texas in 2015 (see Daily GPI, Dec. 12, 2012; Oct. 26, 2012).
However, manufacturers claim that the expansions could be threatened by LNG exports because they would reduce the availability of domestically produced natural gas and increase its price. The Department of Energy (DOE) is expected to decide whether to issue more LNG export permits in February. There are 19 proposed export facilities capable of handling more than 15 Bcf/d of natural gas. The DOE is accepting comments on a study by NERA Economic Consulting, which indicated that exports would be economically beneficial (see Daily GPI, Dec. 6, 2012). Dow has blasted the the report (see Daily GPI, Dec. 10, 2012).
Dow is a member of America’s Energy Advantage (AEA), a coalition that Huntsman joined on Tuesday. “Completely unfettered U.S. exports may enrich a few LNG exporters in the short-term, but real, sustained and broad-based growth in the U.S. economy will come from a balanced approach that considers the needs of American manufacturers and consumers, and ensures that natural gas can be exported without undermining this emerging sunrise for American manufacturing and all the supporting industries and services,” said CEO Peter Huntsman. “Our nation must not squander this opportunity.”
Huntsman said it is evaluating investments in the United States that are worth about $250 million that would rely on a stable and low-cost market.
AEA, a pro-industry coalition, claims on its website to be dedicated to “raising awareness of the emerging renaissance in American manufacturing” because of “abundant and affordable supplies of natural gas” and to “educate policymakers on the potential risks to the U.S. economy of unfettered natural gas exports.” Visitors to the website are encouraged to sign a petition to the DOE that is critical of the NERA study.
America’s Natural Gas Alliance (ANGA), in a statement, said the AEA, “defends its position based on estimates for natural gas demand that are more than 50% higher than DOE estimates. Their position, in opposition to LNG exports, is fundamentally contrary to basic economic principles, as well as longstanding U.S. efforts to expand international trade. Such limits would deny the U.S. opportunities to substantially improve economic growth while creating new jobs and government revenues through new energy resource development.”
ANGA encouraged the DOE to “consider the full range of benefits that will accrue to the U.S. Those benefits include the enhanced energy security and economic prosperity that will be achieved by supporting the open and free trade of LNG.”
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