Two top energy lawmakers in the Senate confirmed last week that the long-awaited second part of a Department of Energy (DOE) report on the economic impact of exporting domestically produced natural gas will likely be released before the end of the year, and that the results will be favorable to gas exports. Congress was called on to express its support for gas exports.
“I’m told that we will likely see it [the report] before the end of the year,” said Sen. Lisa Murkowski of Alaska, the ranking member of the Senate Energy and Natural Resources Committee, during a policy briefing sponsored by America’s Natural Gas Alliance (ANGA) and organized by The Hill newspaper in Washington, DC.
The second half of the study, which was delayed until after the presidential election, is taking a look at the impact of liquefied natural gas (LNG) exports on domestic gas prices, job creation, gross domestic product and the balance of trade. Until its release, the Department of Energy (DOE) put on hold all applications seeking authorization to export LNG to countries with which the United States does not have a free trade agreement.
DOE has not said how long it will take for it to issue final decisions on pending export proposals once it releases the results of the study, which reportedly is being conducted by NERA Economic Consulting.
The first part of the study was conducted by the Energy Information Administration and was completed earlier this year. It found that LNG exports could increase domestic gas prices paid by residential, commercial and industrial customers by a range of 3-9% (see NGI, Jan. 23).
“I’m a believer in exporting some of our gas…I think the report will [show]…that it will be to our advantage to be [both] an importer and exporter,” said Sen. Mary L. Landrieu (D-LA), adding that “hopefully the report will show this.” She believes Congress should make a statement supporting LNG exports. “My view is Congress should set broad policy and let the agencies [determine] the details,” such as how much LNG to export and under what conditions.
Murkowski said the export of LNG will be a top issue of the committee in the upcoming year. “I can guarantee you that the issue of LNG will be full and upfront as we discuss issues on the energy committee.”
In a recent interview, incoming Senate Energy Committee Chairman Ron Wyden (D-OR) said he believes a careful approach should be taken with respect to exporting LNG (see NGI, Nov. 26a). “I think we ought to look before we leap.” This is a “[dramatic] set of changes we’ve seen in our county. It wasn’t very long ago that we were having big battles over the question of constructing import facilities. Now virtually overnight we’re talking about changing that; we’re talking about exporting.”
Wyden “has clearly laid down his marker” on the issue, particularly on the impact that exports will have on domestic gas prices, Murkowski said.
In contrast, she said she has taken a “broader approach” on the issue of LNG exports. “I think it will be good for this country in terms of increasing production,” as well as addressing the trade imbalance and reducing unemployment. “I believe that the better policy for our country when it comes to natural gas is to allow for export of a commodity that we have demonstrated we have enormous reserves.”
The U.S. needs to take advantage of the “pretty enormous price differences that we see around the world.” She said Japan, which paid $17/MMBtu for its gas this summer, is “very interested” in U.S. imports.
Murkowski questioned whether Congress would be able to move a comprehensive energy bill in 2013. “I don’t think that we know at this point in time whether we will be able to successfully advance a full-on energy policy, the likes of which were [seen] in ’05 and ’07.” But given the change in the gas market, with the tremendous onslaught of shale gas, “I think it’s well past time” to do one, she said.
Murkowski said for the past nine months or so, she has been developing a blueprint to a “refreshed energy policy” to ensure that Americans have abundant, affordable, clean, diverse and secure energy. “My sense is that natural gas as a domestically produced resource certainly meets these standards more often than most of the options on the energy menu,” she said.
“I don’t want [you] to assume that Lisa Murkowski is sitting in a dark room cranking out energy policy all by herself…We have truly been working to reach out to others.”
While the “good news” is that the U.S. has enough gas to last more than 100 years, it has come with a downside, according to Murkowski. “The bad news is that we’ve got some federal land management policies, some bureaucratic overreach by the EPA [Environmental Protection Agency] and some other federal agencies that threaten to potentially smother that natural gas production before the benefits can be fully realized,” she said.
“The EPA’s efforts to regulate hydraulic fracturing [at the] federal level…could have a chilling effect on the industry. This is something that we are watching very, very carefully.”
The EPA recently joined on to an exhaustive effort by the Sierra Club to block exports because they would encourage more drilling of shale gas which the group says is devastating the U.S. environment (see NGI, Nov. 26b).
Landrieu called on the gas industry to be “sensitive to land use issues” when cities and towns don’t want drilling rigs within their boundaries. “That’s just common sense…You have to be a lot smarter about where you drill,” she said. “Sometimes, I think, as much as I’m an advocate, [the industry] can get over the heels on this.”
If Congress takes a stab at tax reform in 2013, Murkowski said she will continue to fight to save the energy tax credits. “You just don’t single out one industry [energy]” to shave costs. “Let’s put it all on the table.”
She doesn’t see a carbon tax advancing next year, saying it “doesn’t have the political momentum to succeed.” The tax, which would be assessed on the largest emitters of greenhouse gas emissions (i.e. power plants and refineries), faces a divided Congress.
Â©Copyright 2012Intelligence Press Inc. All rights reserved. The preceding news reportmay not be republished or redistributed, in whole or in part, in anyform, without prior written consent of Intelligence Press, Inc.
© 2022 Natural Gas Intelligence. All rights reserved.
ISSN © 2577-9877 | ISSN © 1532-1266 |