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Senate Energy Leader Criticizes LNG Export Report
Senate chairman of Committee of Energy and Natural Resources, Oregon Democrat Ron Wyden, last week rejected the findings of a study published last year for the Department of Energy (DOE) that favors liquefied natural gas (LNG) exports and called for a do-over.
The study by NERA Economic Consulting study was performed on behalf of the DOE; it may prove critical in its decisions to approve or reject U.S. LNG export permits.
Wyden, a longtime foe of LNG exports (see NGI, Nov. 26, 2012; Oct. 29, 2012a), sent a letter to DOE Secretary Steven Chu, with is chief complaint about NERA’s reliance on the Energy Information Administration’s Annual Energy Outlook 2011 issued in 2010 (see NGI, Dec. 20, 2010). The differences between the 2011 report and the EIA’s latest 2013 outlook are drastic, he wrote. The EIA now expects domestic gas consumption will be 8% higher in 2035 than it projected in 2011.
“The NERA study evaluates dozens of scenarios representing different market conditions, but it does not consider the significant domestic demand growth that outside experts and private industry expect to occur over the next decade. By excluding these sources of demand, NERA, like the EIA’s Annual Energy Outlooks, is significantly understating demand from emerging segments of the natural gas market,” Wyden wrote.
The new sources for natural gas demand include transportation fuel and industrial growth. “The growth in natural gas production and low prices have attracted 100 proposed industrial projects, representing $90 billion in investment and tens of thousands of new jobs, according to Dow Chemical,” Wyden wrote. Dow, which is gaining in the United States on low prices for natural gas, opposes LNG exports (see NGI, Oct. 29, 2012b).
Another shortcoming of the study, according to Wyden is, that it ignores the potential of Canadian LNG exports, which he said could reach 9 Bcf/d in 2014. “Although the NERA study acknowledges that some sectors of the economy will be hurt by exports, the NERA study fails to fully assess the impacts of rising natural gas prices on homeowners and businesses,” he wrote. It recognizes negative consequences of LNG exports but spends only a few paragraphs of its 230-pages actually examining them in detail, he wrote.
Consulting firm Deloitte also released a study that found that U.S. LNG exports would increase domestic natural gas prices by a small amount (see related story).
The debate over exporting LNG is becoming increasingly contentious as stakeholders fight to win the battle for public opinion. Major industrial companies including Dow Chemical, Alcoa Inc. and Celanese recently launched a website discouraging exports of LNG called America’s Energy Advantage. The website includes a page from which users can send a pre-written letter to the DOE attacking the NERA study.
The DOE could make a decision about LNG export permits as early as February following a review of public comments (see NGI, Dec. 10, 2012). There are petitions for 20 export permits to non-free trade agreement countries awaiting a decision.
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