US Senate hears objections to accelerated LNG exports

12 February 2013 20:11  [Source: ICIS news]

WASHINGTON (ICIS)--US energy, chemical and environmental interests on Tuesday cautioned Congress about the potential for accelerated exports of liquefied natural gas (LNG) against the feedstock and power needs of domestic industries and consumers.

Dow Chemical CEO Andrew Liveris told the Senate Energy and Natural Resources Committee that “unchecked LNG export licensing can cause demand shocks, and the resulting price volatility can have substantial adverse impacts on US manufacturing and competitiveness”.

The hearing was called to consider opportunities and challenges raised by newly abundant US domestic supplies of natural gas from shale deposits.

Many in industry, including Liveris, are worried that large-scale expansion of US LNG exports could combine with broader electric utility use of gas, an increasing role for natgas as a transportation fuel and expanding drilling regulations to effectively kill the golden goose by driving domestic natural gas prices ever higher.

Citing the new renaissance in US manufacturing due to the shale gas boom, Liveris told the panel that “we are in year four or five of a 100-year energy advantage”.

However, he cautioned, “it would be misguided to take actions that threaten this advantage”.

“Dow supports expanded exports and trade,” Liveris said. “But we also believe it is crucial that DOE [Department of Energy] have the information and analysis necessary to properly apply the Natural Gas Act requirement that exports be consistent with the public interest.”

He urged Congress to ensure that DOE’s LNG export-permitting process be opened to wider comment by the full range of industries that depend on natural gas as a fuel or feedstock.

But Jack Gerard, president of the American Petroleum Institute (API), argued that in addition to driving a domestic manufacturing renaissance, the new availability of natural gas positions the US as a global energy superpower.

“LNG exports will create thousands of US jobs, generate billions of dollars in revenue, improve our trade deficit and spur major investment in infrastructure, which will strengthen our energy security,” he said in his testimony.

“The question before us not whether we have the energy we need to grow and prosper, we do,” Gerard said, adding: “The question is whether we have the political wisdom and foresight to create a national energy policy that harnesses our great potential as an energy superpower.”

The National Association of Manufacturers (NAM) urged a middle road, with NAM Vice President Ross Eisenberg saying: “The NAM believes that LNG exports should be governed by principles of free trade and open markets.”

“The NAM also opposes bans or similar market-distorting barriers to exports of LNG or any other commodity,” he added.

“We are not calling for policies that favour LNG exports over the use of natural gas domestically,” Eisenberg told the panel, “nor are we calling for policies that would engineer the opposite.”

“We believe in a natural gas policy process that is open, transparent and objective,” he said. “With that in mind, the NAM urges the DOE and policymakers to rely on the best quality information regarding the impact of LNG exports on economic, environmental and energy security interests.”

As did Liveris, Eisenberg warned that while LNG exports and other natgas uses put increasing demand on shale gas resources, government must take care not to inhibit domestic energy production.

“The long, complex and often unmanageable permitting process remains a major obstacle – if not the major obstacle – to full and robust development of our nation’s energy resources,” Eisenberg said.

In stark contrast, the National Resources Defense Council (NRDC) urged the committee to support and expand federal, state and local regulation of fossil energy production, especially the use of hydraulic fracturing (“fracking”), the drilling technology essential to shale gas production.

NRDC President Frances Beinecke said that the focus of US energy policy should be on renewable energy rather than the best uses of natural gas or other fossil energy resources.

“Federal law and policy must also take into account the need to move the US away from the use of fossil fuels, including natural gas,” he told the committee.

“We must make sure that the shale gas boom does not distract us from, or prevent investment in, crucial clean energy strategies, which represent the best path forward,” Beinecke said.

The committee is not considering any specific legislation concerning LNG exports or fracking. The hearing was instead billed as an information-gathering session.

By: Joe Kamalick
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