US Dow wants limited LNG exports to non-free-trade countries

04 February 2013 23:05  [Source: ICIS news]

NEW YORK (ICIS)--The US Department of Energy (DoE) should limit approvals of LNG exports when those shipments are destined to countries without free trade agreements (FTAs) with the US, a Dow Chemical executive said on Monday.

“The law on the books says that the Department of Energy must consider the public interest when reviewing applications to export LNG to non-FTA countries,” said Kevin Kolevar, vice president of government affairs and public policy at US-based Dow Chemical.

“It is incumbent on the government to consider the impact to consumers that use gas for heating as well as US industrial consumers that now have a competitive advantage,” he added.

A study conducted by NERA Economic Consulting concluded that LNG exports would result in a net benefit to the US economy. The study was commissioned by the DoE.

The study “severely underestimates” the impact of unchecked exports on consumers and manufacturing competitiveness, Kolevar said.

The DoE notes on its website that “federal law generally requires approval of natural gas exports to countries that have a free trade agreement with the United States”.

However, for non-FTA countries, the DoE “is required to grant applications for export authorisations unless the Department finds that the proposed exports ‘will not be consistent with the public interest’. Factors for consideration include economic, energy, security and environmental impacts."

Japan is one major country with which the US does not have an FTA. Japan is also a major importer of LNG for its fuel needs. In 2012, Japan’s LNG imports jumped 11.2% to a record 87.3m tonnes.

The US DoE has approved 19 out of 21 applications to export LNG to FTA countries from the lower 48 states with the remaining two pending.

It has only approved one application for LNG exports to non-FTA countries – that of Cheniere Energy’s Sabine Pass Liquefaction project in Louisiana. There are 16 other applications for these exports under review.

“Dow supports a thoughtful, step by step approach to approving LNG exports to non-FTA countries,” said Kolevar.

While Dow is opposed to unlimited US LNG exports from the US Gulf coast, it supports exports from Alaska and the US West coast.

“The US should move forward on LNG exports from Alaska, as this is stranded gas that cannot support other uses. Exports from the West coast make a lot more sense than Gulf exports,” said Kolevar.

He said Dow supports a balanced approach rather than unfettered US LNG exports.

“For the past two decades in Washington DC, people have talked about US energy independence. It would be a shame to cast that aside in less than a decade,” Kolevar said.

By: Joseph Chang
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