LNG study 'fundamentally flawed', Dow Chemical tells US govt

24 January 2013 23:24  [Source: ICIS news]

HOUSTON (ICIS)--A public comment filing by Dow Chemical on Thursday called a recently released US liquefied natural gas (LNG) exports study “fundamentally flawed” and “inadequate for assessing the macroeconomic impacts”.

The public comment filing was in response to the US Department of Energy (DOE)-commissioned study made by New York-based NERA Economic Consulting that was released on 5 December.

The NERA Report concluded positive economic outcomes with the advent of proposed LNG exports, even in cases of unlimited exports, finding that US natural gas prices did not rise to oil parity or levels in consuming regions.

Since the report’s release, Dow has been outspoken in its disagreement with the study's findings. Last week, Dow said it was withdrawing its membership from the National Association of Manufacturers (NAM) and was reconsidering its membership with the American Chemistry Council (ACC) because of the two organisations’ support of natural gas exports.

The ACC on Thursday said it has removed a statement from its website that said it supported US exports of LNG. A Dow representative lauded the move.

Dow said on Thursday in its filing with the DOE that even though the NERA Report found net economic benefits “at the broadest economic level” from US LNG exports, the gains would be concentrated in the oil and gas sectors and all other economic sectors would suffer.

Further, the report’s authors failed to account for many important economic issues, such as regional or sector job losses and gains, the potential for increased gas prices and price volatility, the impacts of tighter environmental regulations on hydraulic fracturing and water disposal, and the likelihood of higher greenhouse gas emissions, the filing said.

“More generally, the [report] is not a reasonable basis for US government policymaking or administrative action,” the filing said.

Dow Chemical added that even if the report had been an accurate macroeconomic assessment of the effect of unfettered US LNG exports, it still doesn’t address “the gross imbalances in harm and benefits that could inure from significantly higher LNG exports”.

Dow Chemical called for a full administrative proceeding, including public hearings, by the US DOE’s Office of Fossil Energy before a federal decision is made in regard to LNG exports.

The DOE accepted comments on the NERA Report until Thursday. A response period to the comments will be held until 25 February.

Once the comment and response windows have concluded, the DOE is expected to take up the consideration of the projects in the order of which they were filed, with preference given to projects in the Federal Energy Regulatory Commission (FERC) pre-filing stage, ICIS understands.

Currently, there are 23 LNG export project filings in the regulatory queue, with 16 projects seeking requests to export LNG to non-free-trade-agreement countries.

Additional reporting by Ruth Liao, Tracy Dang, Joseph Chang and Stefan Baumgarten

By: Jeremy Pafford
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