Exports of liquefied natural gas (LNG) would have a negligible impact on domestic gas supply and prices in the future, according to a position paper released by a major interstate gas pipeline group last week. The authors urged the Department of Energy (DOE) to continue its existing framework for review of requests to export LNG, by noting that exports would contribute to ongoing development of domestic resources and price stability.

The paper, which was endorsed by the Interstate Natural Gas Association of America’s (INGAA) board of directors, cited reports by the National Petroleum Council (NPC) and the Energy Information Administration (EIA) to support its position on LNG exports.

In a second position paper, INGAA stressed the importance for state, local and federal policymakers to “balance appropriately” the need for increased gas supply with concerns about the environment, and to support policies that promote the construction of infrastructure (pipelines, storage, processing and other facilities).

The EIA “has predicted that aggressive growth in LNG exports from the U.S. would result in a modest 3.9% increase in natural gas prices, and a 1-3% increase in electricity prices. Other studies have predicted an even smaller 1.7% increase in natural gas prices resulting from 6 Bcf/d of LNG exports,” said INGAA (see NGI, Jan. 23). “While concerns have been raised regarding the potential for price increases resulting from exports, current limits [by the Obama administration] on market access could also create price volatility, hampering future industry investment.”

As for supply, the 2011 NPC report “showed that even if natural gas demand grew to the highest potential levels — which would include vehicle conversions to natural gas, exports to Mexico and LNG exports on top of [a] dynamic growth in the power generation and industrial sectors — supply would be plentiful to meet domestic demand,” INGAA said.

The nation is flush with shale gas resources. Growth of shale gas production has rapidly outpaced projections in recent years, INGAA noted. Production is estimated to rise 38 Bcf/d by 2035, which it said would be “more than enough to cover U.S. consumption, including projected demand growth from electric generation as high as 26 Bcf/d.”

The pipeline group has called on DOE, which is the lead agency for granting/rejecting LNG export licenses, to maintain the current legal and regulatory framework for LNG exports. When considering a request by a company to export LNG to a country with which the U.S. does not have a free trade agreement (non-FTA), current law requires the DOE to take into consideration whether the exports would be in the “national interest.”

INGAA further noted that current law provides an “additional layer of government review [of LNG exports] not in place for exports of many other energy products, including coal and refined petroleum products.”

Speaking on Capitol Hill recently, DOE Secretary Steven Chu said his department would not act on requests for future exports of LNG until it could determine the full impact on domestic gas prices (see NGI, Feb. 20). While it has the EIA study in hand, the DOE is awaiting the results of a second study. So far, the DOE has approved only one LNG terminal (Cheniere Energy’s Sabine Pass facility) to export LNG to a non-FTA country, according to Chu.

Overall, DOE has received applications to export 12.33 Bcf/d to countries with which the United States has FTAs, and 12.51 Bcf/d to non-FTA countries. 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.

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